Meaning & use
annuity contract
Last updated
Meaning
nouncountablefinance
A legal agreement in which a person pays a lump sum or regular amounts to a company in return for guaranteed income later, often in retirement.
Grammar: Often used with buy, sign or hold: she bought an annuity contract.
Patterns
- an annuity contract with someone
He bought an annuity contract to secure income in retirement.
The annuity contract pays a fixed amount every month.
Before signing the annuity contract, read the fees section.
Word forms
| plural | annuity contracts |
|---|
Common combinations
- buy an annuity contract
- She decided to buy an annuity contract at sixty.
- sign an annuity contract
- He signed the annuity contract with a large insurer.
- a fixed annuity contract
- A fixed annuity contract pays the same each month.
- cancel an annuity contract
- You may be charged a fee to cancel an annuity contract.
Synonyms and how they differ
- pension annuity
- A pension annuity is bought with pension savings, while annuity contract is the broader legal term.
- retirement policy
- Retirement policy is a looser phrase that can describe many products, not only annuities.
- life annuity
- A life annuity pays as long as you live, which is one kind of annuity contract.
Word family
Commonly confused: annuity contract or annuity?
annuity contract vs annuity
Annuity is not the same as annual; an annuity is a stream of payments, while annual means yearly.
Practice
What does an annuity contract usually provide?
Choose one answer.
An annuity contract exchanges money now for payments later. A loan works in the opposite direction.
Make it your own
Write a sentence using “annuity contract”, then check it and compare it with the examples above.