An annuity is a financial product that allows a contract holder to accumulate money on a tax-deferred basis and receive a series of payments at regular intervals. People purchase annuities to obtain an income or to supplement retirement income they will receive from Social Security, pension benefits, investments and other sources. There are many different types of annuity contracts. Immediate annuity contracts provide income payments that normally begin within a year after the premium is paid. Deferred annuity contracts provide income payments that begin later, often after many years. Individual contracts cover only one person, while group contracts cover a specific group of people.