Write a short note on Annuities and their application in business?
Answers
Answer:
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Explanation:
An annuity provides a stream of payments made out on a periodic basis. An annuity consists of a fixed sum of money that somebody receives annually or monthly. The payments continue regularly over a long period. In fact, in many cases, the annuity pays out for the rest of a person’s life.
An annuity is a contract that an insurer issues. The consumer either pays an original lump-sum or makes a series of payments. The insurance company designs the arrangement so that the funds grow over time.
The insurance company guarantees to either make payments periodically or at a future date.
Annuities are one of the main means of securing steady cash flow for people when they enter retirement. People save up in their pension pot into a monthly or annual retirement income. They aim to live on that income when they retire. The annuity is the result of all the payments that the consumer made.