Annuity is a financial instrument that’s similar to an insurance policy, but it has some notable differences. An annuity is a contract with an insurance company that pays you fixed payments after a set period of time or when you reach a specified age. The annuity investor is the party that purchases the annuity, usually as part of his retirement planning. There are two main types of annuities: deferred and immediate. This article takes a closer look at the latter type – immediate annuities – and explains why you might want to consider using one as part of your retirement plan.