Outliving one's money.
The policyholder pays a lump sum to an insurer, and the insurer guarantees to make periodic payments to the annuitant for life or some other period. These payments remain the same or grow in a fixed contract, may fluctuate with greater growth potential in a variable contract, or may increase but not decrease in an equity-indexed product. The periodic payments are likely to be higher than for other fixed-income investments, because they include a return of principal in each payment. That is particularly true when bought by the elderly since the payments come from a pool of money that is divided among survivors when other annuitants in the pool die.
People in need of reliable income that lasts for life. An immediate annuity is a kind of personal pension plan.
People who have reliable pension income or are affluent enough to live off their assets without fear of depleting them.
Returns are greater after 65.
A single premium.