Annuity, << uh NOO uh tee, >> is a sum of money paid out at regular times, usually monthly or yearly. The word comes from the Latin word annus, meaning year. Insurance policies, wills, and other documents provide for annuities. People may leave money to an heir in the form of an annuity. The inheritance will then be paid in installments instead of in a lump sum. Usually the term annuity refers to a type of insurance. Individuals pay the insurance company a certain amount of money. They receive in return income payments that begin at a certain time and continue on a regular basis for a certain period. For instance, payments may begin when a person reaches 60 and continue until the person’s death. Pension plans also provide for annuities. The most common use of annuities is to provide regular payments during a person’s retirement years. See also Insurance (Annuities) ; Pension ; Social security .
