What Is the Definition of "annuity"?


Quick Answer

An annuity is a financial product that a person invests in and at a later date begins to receive income from. The amount of money an individual receives depends on what type of annuity is chosen.

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Full Answer

A fixed annuity provides a guaranteed payout, while the income from a variable annuity is tied to the performance of its underlying investments. There are highly variable schedules for annuity payments, such as those paid in one-lump sum to payments made every month. Frequently considered in connection with retirement, investing in annuities is not a decision to be made without careful research or consultation with a professional.

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