n., pl. -ties.

1. 1. The annual payment of an allowance or income.
   2. The right to receive this payment or the obligation to make this payment.
2. A contract or agreement by which one receives fixed payments on an investment for a lifetime or for a specified number of years.

[Middle English annuite, from Anglo-Norman, from Medieval Latin annuitās, from Latin annuus, yearly, from annus, year.]

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.

Investopedia Says:
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.

Related Links:
These contracts provide a guaranteed income stream. Learn how they work and their benefits. An Overview Of Annuities
Learn to calculate the present and future value of fixed payments required from you or owed to you. Anything But Ordinary: Calculating The Present And Future Value Of Annuities
Variable annuities are another way to save money tax-deferred - but don't jump in blindly! Getting the Whole Story on Variable Annuities
These may look like good retirement vehicles, but beware of fees buried in the fine print. Passing the Buck: The Hidden Costs of Annuities
If this investment product has caused you sleepless nights, it's time to consider alternatives. Taking The Bite Out Of Annuity Losses
Living comfortably can be easy if you follow a simple plan. Stretch Your Retirement Budget

Contract sold by insurance companies that pays a monthly (or quarterly, semiannual, or annual) income benefit for the life of a person (the annuitant), for the lives of two or more persons, or for a specified period of time. The annuitant can never outlive the income from the annuity. While the basic purpose of life insurance is to provide an income for a beneficiary at the death of the insured, the annuity is intended to provide an income for life for the annuitant. There are variations in both the way that payments are made by a buyer during the accumulation period, and in the way payments are made to the annuitant during the liquidation period.

An annuity may be bought by means of installments, with benefits scheduled to begin at a specified age such as 65; or, it may be bought by means of a single lump sum, with benefits scheduled to begin immediately or at a later date. No physical examination is required. For variations in methods of payment, see Cash Refund Annuity; Fixed Dollar Annuity; Installment Refund Annuity; Joint-Life and Survivorship Annuity; Joint Life Annuity; Life annuity Certain; Pure Annuity; Variable Dollar Annuity.

A series of equal or nearly equal periodic payments or receipts. See Annuity Due, Ordinary Annuity.
Example: The receipt of $100 per year for the next 5 years constitutes a $100 five-year annuity.

n

A series of payments of a fixed amount for a number of years.

For more information on annuity, visit Britannica.com.

This entry contains information applicable to United States law only.

A right to receive periodic payments, usually fixed in size, for life or a term of years that is created by a contract or other legal document.

The most common form of an annuity is akin to a savings account. The annuitant, the person who creates an annuity for his or her own benefit, deposits a sum of money, the principal, with an individual, business, or insurance company to be invested so that the principal will earn income at a certain percentage, usually specified by the terms of the annuity. This income is used by the company to pay the annuitant. Each payment received by the annuitant, sometimes called the primary beneficiary, represents a partial return of the principal and a portion of the income generated by its investment. Such annuities are employed frequently to provide a source of income to persons upon their retirement. A group annuity contract supplies periodic payments to a retired individual member of a group of employees covered by their employer's master contract. A retirement annuity is a policy paid to the annuitant after retirement. If the annuitant dies prior to the expiration of the annuity or wants to surrender the policy, an amount specified in the terms of the annuity is returned to the annuitant's estate or designated beneficiary.

Classification

Annuities are classified according to the nature of the payment and the duration of time for payment. A fixed annuity requires payment in a specified amount to be made for the term of the annuity regardless of economic changes due to inflation or the fluctuation of the ventures in which the principal is invested. A variable annuity provides for payments that fluctuate in size contingent upon the success of the investment of the principal. Such variation offsets the effect of inflation upon the annuitant. If, however, the investment has fared poorly, the size of the payments decreases.

A straight annuity is a contract by an insurance company to make variable payments at monthly or yearly intervals. A life or straight life annuity is payable to an annuitant only during the annuitant's lifetime and ceases upon his or her death. The size of the periodic payment is usually fixed based upon actuarial charts that project the expected life span of a person based upon age and physical condition. This type of annuity often contains provisions that promise payment to be made to a secondary beneficiary, named by the annuitant to receive benefits in case of the annuitant's death, or to the annuitant's heirs for a period of time even if the annuitant has died before the expiration of the designated period. A deferred annuity is one in which payments start at a stipulated future date only if the annuitant is alive at that time. Payment of the income tax due on the income generated is delayed until payments start. A deferred annuity is used primarily by a person who does not want to receive payments until he or she is in a lower tax bracket, such as upon retirement.

A refund annuity, sometimes called a cash refund annuity, is a policy that promises to pay a set amount annually during the annuitant's life. In case the annuitant dies before receiving payments for the full amount of the annuity, his or her estate will receive a sum that is the difference between the purchase price and the sum paid during the annuitant's lifetime.

A joint annuity is one that is payable to two named persons but upon the death of one, the annuity terminates. A joint and survivorship annuity is a policy payable to the named annuitants during their lives and continues for the benefit of the surviving annuitant upon the death of the other.

Tax Aspects

When an annuity is paid to an annuitant, he or she receives a portion of the principal and part of the return it has earned. For federal and state income tax purposes, only the amount attributable to the income generated by the principal, not the principal itself, is considered taxable income. The Internal Revenue Code provides an exclusion ratio to determine the amount of taxable income paid to the annuitant. Special tax rules apply to annuities that are qualified employee retirement plans.

The annuity payments made to the estate of a decedent might be subject to estate and gift tax as an asset of the decedent's gross estate. Federal and state laws governing estate tax must be consulted to determine the liability for such taxes.

(uh-nooh-uh-tee)

A sum of money payable yearly or at regular intervals.

Many people's retirement funds are set up to be paid in annuities.

IN BRIEF: Yearly payment or income.

Mrs. Stevenson was living well off her annuity.

This entry is from Wikipedia, the leading user-contributed encyclopedia. It may not have been reviewed by professional editors (see full disclaimer)

Dansk (Danish)
n. - annuitet, livsrente

Nederlands (Dutch)
jaarlijkse uitkering/ afbetaling, erfrente, jaarlijkse som ter afbetaling, annuïteit

Français (French)
n. - rente, rente viagère, annuité, viager

Deutsch (German)
n. - Jahresrente, Annuität

Ελληνική (Greek)
n. - (οικον.) (ετήσιο) επίδομα, μέρισμα, (ετήσια) πρόσοδος

Italiano (Italian)
rendita

Português (Portuguese)
n. - anuidade (f), renda (f) anual

Русский (Russian)
ежегодная рента, ежегодный доход

Español (Spanish)
n. - renta vitalicia, anualidad

Svenska (Swedish)
n. - årligt underhåll, livränta

中文（简体） (Chinese (Simplified))
养老金, 年金, 年金领受权

中文（繁體） (Chinese (Traditional))
n. - 養老金, 年金, 年金領受權

한국어 (Korean)
n. - 연금

日本語 (Japanese)
n. - 年金, 年金支払い義務, 年賦金

العربيه (Arabic)
‏(الاسم) سناهيه : مرتب سنوي يتلقاه المر مدى الحياه عادة‏

עברית (Hebrew)
n. - ‮קצבה שנתית, אנונה‬

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annuity