Definition:
A schedule of regularly dispersed payments which is guaranteed for a specified period of time, generally the remainder of the recipient's life. Annuities are often offered as insurance and lottery settlements as they allow the dispensing agent to absorb the blow of the whole contract over a longer period of time, and they allow recipients a guaranteed income stream which is often collectively worth more than what could have been obtained in one lump sum. Deferred annuities involve payments which only start after a certain amount of time has passed. Payments on immediate annuities begin without any wait period. Annuities can be "fixed," in which the payments are the same over the contract's life, or "variable," in which they may be pegged to investment success, CPI, T-bill rates, etc.
