An annuity is an investment which provides the recipient with an annual income for a fixed period or for the rest of a person’s life.
In the UK, pension investment funds are converted into an annuity when retirement age starts. This means there is a big market for annuities in the UK, although most people will think of it in terms of pension payments rather than calling it an annuity.
In the US an annuity may be used as a type of insurance scheme. For example, people may take out health insurance. If they become ill the insurance firm will agree to set up an annuity scheme to pay regular amounts during their illness.