Annuity

A tax sheltering vehicle that consists of an unsecured contract between the company and the annuitant that grows deferred-free and is used to provide for one's later years. Capital gains and income accumulate tax deferred. All income taxes are deferred until maturing of the annuity.

An annuity results in a stream of payments made to the annuitant during their lifetime under the annuity agreement. Taxes are paid on the income, interest earned and the capital gains but only to the extent as and when they are received. Currently, there is no annual limit on purchases, but there is no tax credit for purchases.