Annuity

Definition: 

This is a product sold by an insurance or other financial services company. In return for handing over a one-off payment, the company then pays over regular sums until a particular event, the date of which cannot be predicted, occurs (in the case of pensions, this event is usually death). An annuity is used to provide a pension by any scheme that builds up a pensions pot. Different kinds of annuities are available depending on whether you want to provide for dependants and to what extent you want your pension payments to increase.