The term annuity refers to a series of insurance benefit payments made to Beneficiaries over time rather than all at once (known as a Lump Sum).
The payments can be made monthly, quarterly, annually, or at any other interval specified in the policy.
For example, an annuity can be structured to pay out for a specific period or for the remainder of the Beneficiary's life.
Though annuities can gain interest over time and pay more than a lump sum arrangement, they are subject to taxation, whereas lump sums are not.
An annuity can be either immediate or deferred. An immediate annuity starts paying right after an event like a death, whereas a deferred annuity defers payments until a later date, and may accumulate value over time.