Annuities are a product of the insurance industry.  They were designed to defer taxes on investment earnings and provide various ways to pay out proceeds to the owner or beneficiary under specifically prescribed terms and timeframes.  Unfortunately they are sometimes sold to investors in situations where they are not necessary.  Once you are invested in an annuity, surrender charges make it hard to get your money out for several years.  Management fees and insurance costs can also make annuities a costly investment.

Clients sometimes own annuities they have purchased through an insurance or bank representative.   After the surrender period passes, Summit usually recommends doing a tax-free exchange to a Vanguard annuity.  Offered by Vanguard Group, the well-known mutual fund company, Vanguard annuities have no surrender charges or lock up periods and the total management fees and insurance costs are usually less than one third the cost of conventional annuities.