annuity
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In investment, an annuity is a series of payments of the same kind made at equal time intervals, usually over a finite term. Annuities are commonly issued by life insurance companies, where an individual pays a lump sum or a series of premiums in return for regular income payments, often to provide retirement or survivor benefits.
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- Annuity
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Article
21 sectionsContents
- Types
- Timing of payments
- Contingency of payments
- Variability of payments
- Deferral of payments
- Valuation
- Annuity-certain
- Annuity-immediate
- Proof of annuity-immediate formula
- Annuity-due
- Perpetuity
- Life annuities
- Amortization calculations
- Example calculations
- Example 1: present value to payment (annuity-due)
- Example 2: present value to payment (annuity-due)
- Example 3: accumulated value to payment (annuity-due)
- Legal regimes
- See also
- References
- Other sources
In investment, an annuity is a series of payments of the same kind made at equal time intervals, usually over a finite term. Annuities are commonly issued by life insurance companies, where an individual pays a lump sum or a series of premiums in return for regular income payments, often to provide retirement or survivor benefits.
Typical examples include regular deposits to a savings account, monthly home mortgage payments, monthly insurance premiums and pension payments. The value of an annuity is usually expressed as a present value or future value, calculated by discounting or accumulating the payments at a specified interest rate.