While annuities were originally conceived with retirement planning in mind, they can certainly be used for other purposes. Remember that many deferred annuities have fairly high surrender charges in the earlier contract years, so it is important to plan your future annuity distributions with an eye toward what it might cost to get the money out. Also, remember that there is a 10% penalty tax for withdrawals prior to age 59½. Because loans are classified as taxable withdrawals, most insurance companies do not permit loans from annuities.

An annuity can be an ideal investment vehicle for such important goals as education expenses for grandchildren and paying for hospital and medical costs associated with an accident or lengthy illness during one's older years. Since annuities are designed to give guaranteed periodic payments, they can be tailored to provide systematic cash flows for almost any purpose. Whatever the purpose, an annuity may be exactly what you need.