A contract in which a person pays a premium to an insurance company, usually in one lump sum, and in return receives periodic payments for an agreed period or for the rest of his or her life. An annuity has. been described as the opposite of life assurance as the policy holder pays the lump sum and the insurer makes the regular payments. Annuities are often purchased at a time of prosperity to convert capital into an income during old age. See also ANNUITY CERTAIN; DEFERRED ANNUITY.
