From Adviser Guide:
Q: What is an annuity?
An annuity is basically an insurance contract.
This insurance contract guarantees to pay an income for life, in exchange for a lump sum purchase price (usually a pension fund).
Mike Morrison, head of pensions development at Axa Wealth, said there are also fixed-term annuities available which, as the name suggests, are payable for a fixed-term, for example 10 years, with the ability to then choose another retirement option, such as another annuity or taking drawdown, at the end of the term.