Annuity Terms

Sequence of equal payments made at equal time intervals

Ex. daily wages, periodic payments of installment purchases, montly rent, annual insurance premium

Time between successive payments

Time between the first and last payment intervals

Amount of each payment

An annuity for which the payment period is the same as the interest period

Ex. An annuity for which the interest rate is compounded monthly and payments are also made monthly

Interest and payment periods do not coincide with one another

Ex. An annuity for which the interest rate is compounded monthly while payments are made monthly

Annuity where payments begin and end at fixed times

Ex. Installment

Payments are dependent on an event that can not be foretold

Ex. Life insurance

Annuity where payments are made at the end of each payment interval

Annuity where payments are made at the beginning of each payment interval