Annuity: meaning, definitions and examples

Historical Origins

• The concept of annuities dates back to the Roman Empire where people paid for regular income in exchange for their property.
• The word 'annuity' comes from the Latin 'annuitas' meaning 'yearly', highlighting its periodic payments.
• In the 16th century, annuities became popular in England as the government issued them to finance wars and public expenses.

Finance

• Annuities are often used as retirement income, providing a steady cash flow after someone stops working.
• They can come in different forms, such as fixed, variable, and indexed annuities, each offering unique benefits.
• The first known life annuity was offered in the UK in 1693, showing their long-standing significance in personal finance.

Mathematics

• Calculating the value of an annuity involves understanding present value and future value, combining finance with mathematics.
• The formula for calculating the present value of an annuity helps determine how much cash is needed today for future payments.
• Actuaries use complex statistical models to assess risks associated with offering annuities, helping companies manage their financial exposure.

Cultural References

• Annuities are often featured in discussions about retirement planning in popular media, emphasizing the importance of financial security.
• They have appeared in many financial advice programs, showcasing strategies for wealth management.
• In literature, characters contemplating their future often reference annuities as a safe way to ensure ongoing support.

At #6,186 in frequency, this word belongs to advanced vocabulary. It's less common than core vocabulary but important for sophisticated expression.

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• 6183 contend
• 6184 liberation
• 6185 olive
• 6186 annuity
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• 6188 vocabulary
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