An insurance contract that features an owner, who purchases the contract and is the person who typically funds it; an annuitant, named by the owner and whose life expectancy is used to determine the amount of money that will be paid when owner chooses to annuitize the contract, which converts the account value to a series of monthly payments ranging from a few years to the annuitant’s lifetime. Once annuitized, changes cannot be made, and payments cease upon the death of the annuitant, unless the owner had selected a guaranteed minimum period of payments or a “joint and survivor” payment schedule that is based on the combined lifetimes of the annuitant and the annuitant’s spouse. The owner also names a beneficiary, who receives the value of the annuity upon the owner’s death if the contract had not been annuitized. The growth in value of an annuity is tax-deferred until withdrawal. Withdrawals are subject to tax at ordinary income tax rates; withdrawals prior to age 59½ are also subject to a 10% IRS penalty. See Fixed Annuity, Bonus Annuity, Immediate Income Annuity, Variable Annuity