An annuity is a trade. You hand an insurance company a chunk of savings, and it hands you back a stream of income, starting now or starting later. That's the whole idea. Everything else is variations on that theme.
Why would anyone make the trade? Because a pile of money and a paycheck are different tools. A pile can run out, and you don't get to know in advance how long it needs to last. A paycheck that shows up every month for as long as you live takes that guesswork off the table. I walked through the problem in Retirement Math: Turning a Pile of Savings Into a Monthly Paycheck, and annuities are one of the few tools that solve it directly.
The main flavors, quickly. An immediate annuity starts paying right away. A deferred annuity grows first and pays later. A fixed annuity credits a set rate. A fixed indexed annuity ties growth to a market index with a floor under it, so a bad market year credits zero instead of a loss. Variable annuities hold actual market investments, gains and losses included. Each step up that ladder trades some certainty for some potential.
The fair knock on annuities is that some are loaded with fees and sold to people who never needed them. That happens, and it's a real problem in this business. It's also true that a plain immediate annuity is one of the cheapest ways ever invented to turn savings into lifetime income. The product isn't good or bad on its own. The fit is good or bad.
Whether it fits you depends on your other income sources, your health, and what you want your money doing in your eighties. Guarantees are only as strong as the company standing behind the contract, so who issues it matters too. The annuities overview goes deeper, and if you'd rather look at your actual numbers than concepts, that's what the free needs analysis is for.