Annuities

In character the annuity is the opposite of insurance against death, and may be defined as a contract whereby for a cash consideration one party (the insurer) agrees to pay the other (the annuitant) a stipulated sum (the annuity) throughout life, or during life within a fixed term, either annually, semi-annually, or quarterly. Its purpose it is seen is to protect against a hazard the outliving of one's income which is just the opposite of that confronting a person who desires life insurance as protection against the loss of income through premature death. Technically, however, the two types of contracts are closely related to each other, since the cost of both is computed on the basis of similar data and principles.