Annuities are an investment tool. It is an insurance policy but is similar in functioning to an investment product and thus very often compared to them. In general, the insurance company providing the annuity contract receives either a lump sum deposit or a monthly sum of money from the investor which can typically accrue for 10-25 years. At that point the investor can elect to receive a monthly return of money as the annuity comes to maturity. The payout phase on an annuity can continue for any specified period of time or for life depending on the terms in the annuity contract.

In addition to purchase of Annuities by monthly payments, they can also be purchased by making a lump sum payment. This is often done by workers retiring with a 401K plan. When they retire, they use the lump sum money that they get from their 401K to purchase the annuity. One of the benefits with this type of transaction is that the money used from the 401K to purchase the annuity continues to be tax deferred until received as monthly income, i.e. paid until a later date.

An annuity is sometimes thought of as an investment only for the wealthy. However this is not the case. Anyone who is saving for retirement can just as easily do so by investing in an annuity. Any amount of discretionary income, that is not needed to pay bills and is normally going into a savings account, can just as well be put towards an annuity contract.

When purchasing an annuity, finding the best annuity quotes is an important factor. Comparing multiple insurance companies or brokers that provide annuities is recommended. Consider shopping around for your annuity, similar to looking for the lowest rates and best coverage when purchasing a car insurance policy.

Different providers will give different annuity quotes for the same investor. The best way to choose the right annuity is to see many different quotes, giving an overall picture of the current annuity market. But it can be confusing to sort through different providers' quotes; many options are available for customization. These options include the length of time the investor makes payments on the annuity, the length of time the investor will receive stipends from the annuity, and the value of both the payment and the stipend.

The good news is that, its not as difficult to find the best annuity as you might think. There are options available wherein you can research and obtain various annuity quotes from a variety of providers right in one place. Investors can now log onto many available annuity sites on the internet and research any amount of data they would ever want, related to any annuity. With so many tools around to help you find the right annuity, it would be quite unfortunate not to research annuities as you would any other investment.