Annuity

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Annuity in financial theory means the terminating flow of fixed payments paid over a fixed time period. The term is widely used in financial discussions while calculating the flow of payments after considering the interest rate as well as the future value. Some examples of annuities include the regular savings account deposit, monthly insurance and home mortgage payments. The value of annuities is found out after taking into account the payment dates.

The different types of annuities are ordinary annuity, annuity-due, fixed annuities and variable annuities. A special type of annuity is the equity-indexed annuity, in which a large and fixed sum of money is paid to an insurance company.

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