A contract or policy that is issued by an insurance company providing a regular payment of income to the owner of the policy in exchange for an upfront premium. The income is paid by the issuer of the annuity policy or contract. There are several types of annuities but they can be generally categorized according to how the annuity is purchased (simple or flexible premiums); when the annuity payments begin (immediate or deferred); and how the policy value is invested (fixed or variable).