What does Annuity mean? Read on to discover the definition & meaning of the term Annuity - to help you better understand the language used in insurance policies.
Series of payments at fixed intervals, guaranteed for a fixed number of years or the lifetime of one or more individuals. Similar to a pension, the money is paid out of an investment contract under which the annuitant(s) deposit certain sums (in a lump sum or in installments) with an annuity guarantor (usually a government agency or an insurance firm). The amount paid back includes principal and interest, either or both of which (depending on the local regulations) may be tax exempt. An annuity is not an insurance policy but a tax-shelter.
We hope the you have a better understanding of the meaning of Annuity.