Annuity


Annuity
A financial product sold by financial institutions that is designed to accept and grow funds from an individual and then, upon annuitization, pay out a stream of payments to the individual at a later point in time. Annuities are primarily used as a means of securing a steady cash flow for an individual during their retirement years.

Annuities can be structured according to a wide array of details and factors, such as the duration of time that payments from the annuity can be guaranteed to continue. Annuities can be created so that, upon annuitization, payments will continue so long as either the annuitant or their spouse is alive. Alternatively, annuities can be structured to pay out funds for a fixed amount of time, such as 20 years, regardless of how long the annuitant lives.

Annuities can be structured to provide fixed periodic payments to the annuitant or variable payments. The intent of variable annuities is to allow the annuitant to receive greater payments if investments of the annuity fund do well and smaller payments if its investments do poorly. This provides for a less stable cash flow than a fixed annuity, but allows the annuitant to reap the benefits of strong returns from their fund's investments.

The different ways in which annuities can be structured provide individuals seeking annuities the flexibility to construct an annuity contract that will best meet their needs.


Investment dictionary. . 2012.

Look at other dictionaries:

  • annuity — an·nu·ity /ə nü ə tē, nyü / n pl ities [Medieval Latin annuitas, from Latin annuus yearly] 1: an amount payable at regular intervals (as yearly or quarterly) for a certain or uncertain period 2: the grant of or the right to receive an annuity his …   Law dictionary

  • Annuity — An*nu i*ty, n.; pl. {Annuities}. [LL. annuitas, fr. L. annus year: cf. F. annuit[ e].] A sum of money, payable yearly, to continue for a given number of years, for life, or forever; an annual allowance. [1913 Webster] …   The Collaborative International Dictionary of English

  • annuity — (n.) early 15c., a yearly allowance, grant payable in annual installments, from Anglo Fr., O.Fr. annuité (14c.) or directly from M.L. annuitatem (nom. annuitas), from L. annus year (see ANNUAL (Cf. annual) (adj.)). Meaning an investment that… …   Etymology dictionary

  • annuity — ► NOUN (pl. annuities) ▪ a fixed yearly allowance, especially one provided by a form of investment. ORIGIN Latin annuitas, from annuus yearly …   English terms dictionary

  • annuity — [ə no͞o′ə tē, ənyo͞o′ə tē] n. pl. annuities [ME & OFr annuite < ML annuitas < L annuus, annual < annus: see ANNUAL] 1. a payment of a fixed sum of money at regular intervals of time, esp. yearly 2. an investment yielding periodic… …   English World dictionary

  • annuity — /an(y)uwatiy/ A right to receive fixed, periodic payments, either for life or for a term of years. Moore v. O Cheskey, App., 87 N.M. 66, 529 P.2d 292, 293. A fixed sum payable to a person at specified intervals for a specific period of time or… …   Black's law dictionary

  • annuity — /an(y)uwatiy/ A right to receive fixed, periodic payments, either for life or for a term of years. Moore v. O Cheskey, App., 87 N.M. 66, 529 P.2d 292, 293. A fixed sum payable to a person at specified intervals for a specific period of time or… …   Black's law dictionary

  • annuity — A regular periodic payment ( periodic payments) made by an insurance company to a policyholder for a specified period of time. Bloomberg Financial Dictionary An annuity is essentially a regular income for life and is usually purchased with your… …   Financial and business terms

  • Annuity — A regular periodic payment made by an insurance company to a policyholder for a specified period of time. The New York Times Financial Glossary * * * annuity an‧nu‧i‧ty [əˈnjuːti ǁ əˈnuː ] noun annuities PLURALFORM [countable] 1. INSURANCE the… …   Financial and business terms

  • annuity — /euh nooh i tee, euh nyooh /, n., pl. annuities. 1. a specified income payable at stated intervals for a fixed or a contingent period, often for the recipient s life, in consideration of a stipulated premium paid either in prior installment… …   Universalium

  • annuity — In the older sense of the term, a yearly payment of a certain sum of money granted to another in fee, for life, or for years. In the modern sense, a right, bequeathed, donated, or purchased, to receive fixed or certain periodical payments,… …   Ballentine's law dictionary