Insurance Glossary

Insurance Term - Annuity

An annuity plan is a form of personal insurance that provides a tax-deferred regular source of income. The person purchasing the plan first needs to pay the premium for the contract, which appreciates over a fixed period of time until it matures. It then provides regular payments for the duration of the contract. Annuity plans differ in terms of both the risk and the interest rate they bear. An annuity plan can be a good way to provide a fixed income for retirement, that is, partially insulated from the volatility of the market. Typically, annuity plans continue to provide payments for the entire lifetime of the plan holder.

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