Annuity meaning

ə-no͝o'ĭ-tē, ə-nyo͝o'-
Although the method of obtaining and maintaining these two types of annuities are the same, there are differences in how you will be paid in the long run. Also, the type of annuity that you choose will greatly affect the amount of money you can make in a certain period of time. Depending on your savings goals, one type of annuity may be preferable over another.

Money that people receive regularly once they are retired is an example of an annuity.

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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 payments or in a single payment. For example, a retirement annuity paid to a public officer following his or her retirement.
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The definition of an annuity is a sum of money or an investment that is paid at regular intervals. There are two main types of annuities.

Fixed rate annuities - The primary goal of the fixed rate annuity is to save money for the long term. You will make monthly payments of premiums into the annuity and upon a specified date of maturation or when you are ready you can withdraw your funds. With a fixed rate annuity, you are guaranteed a certain payout amount based on the rate that was available or agreed upon at the time you purchased your annuity. Many people that are looking for a way to invest their money that offers little to moderate risk prefer the fixed rate annuity.

Variable rate annuities - Variable rate annuities differ from the fixed rate varieties because there is not a determined rate at which you will compensated. The rate of return fluctuates with the market. Variable rate annuities are sometimes marketed to people that are capable of handling a higher level of risk.

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A fixed sum paid out at regular intervals for a certain period of time and subject to limitations set by the grantor. For example, a person may be entitled to fixed and periodic payments for the rest of his life once he reaches a certain age. See also life estate and trust.
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A contract or agreement by which one receives fixed payments on an investment for a lifetime or for a specified number of years.
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A payment of a fixed sum of money at regular intervals of time, esp. yearly.
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An investment yielding periodic payments during the annuitant's lifetime, for a stated number of years, or in perpetuity.
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A financial instrument that pays out the investor’s earnings on a regular, periodic basis for a set amount of time. Annuities typically are used to provide funds for retirement. Annuities may be paid for the duration of a person’s life or may be set for a certain period of time. Annuities are tax-deferred, so the earnings from investments in these accounts grow without tax liability until the benefits are paid out.
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The right to receive such an income.
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The duty to make such a payment or payments.
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Origin of annuity

  • Middle English annuite from Anglo-Norman from Medieval Latin annuitās from Latin annuus yearly from annus year at- in Indo-European roots
    From American Heritage Dictionary of the English Language, 5th Edition
  • From French annuité, from Medieval Latin annuitās, from Latin annuus (“annual”).
    From Wiktionary