Annuity: A long-term, interest-paying contract offered through an insurance company or financial institution. An annuity can be 'long-term' as a means of accumulating income while deferring taxes, or it can be 'immediate' meaning it pays the purchaser income now at fixed or variable interest rates as long as the purchaser is living. The income from an annuity may be paid to the purchaser, or to any named annuitants. The purchaser is the individual who establishes the annuity. An annuitant is an individual or an organization who will benefit either solely or partially from the annuity. Example Linda Smith purchases an annuity which pays her income immediately from her local bank. A case worker creates an Annuity record and records Linda Smith as having ownership of the annuity. The Annuity contains the banks details and that Linda Smith is considered the annuitant as she used her funds to set it up by purchasing the annuity. |
