| Annuity payments are fixed monthly payments | | | | types of annuities are fixed, variable and |
| paid by an insurance company to the individual. | | | | equity-indexed. |
| The payment made must be a fixed amount paid | | | | Fixed annuities are defined as fixed monthly |
| at evenly spaced intervals of time. They are fixed | | | | payments and are considered to be low risk |
| for paying either at the beginning or the end of | | | | investments. Variable ones are payments invested |
| the period. Annuity payments are mainly paid | | | | in portions. Equity-indexed ones are lump sum |
| yearly, semi-annually, quarterly or monthly. Some | | | | payments paid to the insurance company. |
| of the most common examples of annuities are | | | | Many people make investments as this enables |
| car payments, pension, insurance premiums and | | | | the insurance company to pay a fixed amount of |
| mortgages. They are mainly ordinary annuity and | | | | cash at regular intervals to benefit the life of an |
| annuity due. Ordinary annuity refers to fixed | | | | annuitant. When an annuity is paid to benefit the |
| monthly payments at the end of each interval | | | | life, he or she is applicable to pay tax that equals |
| where the rate of interest compounds similarly to | | | | the amount attributable to the income generated |
| the payment. In annuity due, a fixed payment | | | | by the principal. Special tax rules are applied to |
| occurs at the beginning of the interval. Other | | | | qualified employees for retirement annuity. |