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An annuity is simply a "collection of repayments made at equivalent intervals." That suggests that your home loan, insurance policy, savings, as well as pension are all annuities. Mostly what makes something an annuity is the consistency of the settlements. The kind of annuity we are chatting regarding here is the kind of long-lasting investment where you pay into it over time, as well as after that you gather repayments from it over time - usually for life. How Annuities Work Normally, the funds that are paid into the investment are tax-deferred until you begin approving annuity payments. The tax obligations you pay are just normal income tax obligations also, which means that you pay taxes on the revenue much like you would certainly any kind of other income you receive. You can acquire annuities with after-tax cash also. If you do that, you don't need to pay taxes when you get it till you get your principal back. All revenues from annuities go through normal inco