Business, Legal & Accounting Glossary

Definition: Annuity

Quick Summary of Annuity

A purchased policy that pays a fixed amount of benefits every year — although most annuities actually pay monthly — for the life of the person who is entitled to those benefits. In a simple life annuity, when the person receiving the annuity dies, the benefits stop; there is no final lump sum payment and no provision to pay benefits to a spouse or other survivor. A continuous annuity pays monthly installments for the life of the retired worker, and also provides a smaller continuing annuity for the worker’s spouse or other survivor after the worker’s death. A joint and survivor annuity pays monthly benefits as long as the retired worker is alive, and then continues to pay the worker’s spouse for life.

What is the dictionary definition of Annuity?

Dictionary Definition

A right to receive amounts of money regularly over a certain fixed period, in perpetuity, or, especially, over the remaining life or lives of one or more beneficiaries.

An annuity is a series of payments made at equal intervals. Examples of annuities are regular deposits to a savings account, monthly home mortgage payments, monthly insurance payments and pension payments. Annuities can be classified by the frequency of payment dates

Income from capital investment paid in a series of regular payments.
If you do not pay a secured loan, they will take away whatever assets we used to secure the loan

Full Definition of Annuity

An income-generating investment whereby, in return for the payment of a single lump sum, the annuitant receives regular amounts of income over a predefined period.

An annuity is an investment-related product designed to provide monetary payments to an annuitant at regular intervals. In many cases, an annuity is a contract sold by an insurance company. An annuity is frequently used as retirement income and often cannot be withdrawn until a specified age. Tax deferral benefits are offered with an annuity, which means that annuity earnings grow tax-deferred until the time of withdrawal. The most common type of annuity is similar to a savings account. The annuitant deposits a sum of money (the principal), with an insurance company, business or an individual to be invested in a manner that will allow the principal to earn income at a certain percentage. The payments of an annuity can be at a fixed rate or a variable rate. A fixed annuity ensures a specified payment amount, while a variable annuity does not. Other types of annuities include: a straight annuity, a deferred annuity, a joint annuity and a cash refund annuity, among others. An annuity typically has a death benefit, with the accumulated earnings going to the annuitant’s heirs or other beneficiaries.


Examples of Annuity in a sentence

Paul receives a small annuity.
Investors ought to consider allocating some money towards an annuity.
Your money can grow much faster in a tax-deferred annuity, than in a taxable account.
In the financial jargon. an annuity is just a regular flow of cash into or out of an account.
In order to make larger returns, I’ve decided to transfer my life insurance into an annuity.
He was compensated by an annuity charged upon the land.
After her husband’s death, the widow was able to live comfortably on the annuity payments from his life insurance policy.
While it may be tempting to convert your policy into an immediate annuity, if you defer your annuities you will receive more money when you retire.

Synonyms For Annuity

allowance, pension, income, share, revenue

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Annuity. Payroll & Accounting Heaven Ltd. June 23, 2021
Chicago Manual of Style (CMS):
Annuity. Payroll & Accounting Heaven Ltd. (accessed: June 23, 2021).
American Psychological Association (APA):
Annuity. Retrieved June 23, 2021, from website:

Definition Sources

Definitions for Annuity are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 22nd April, 2020 | 16 Views.