An annuity is a periodical level payment made in exchange at the purchase money for the remainder of the life time of a person or for a specified period.

The recipient is usually a s an annuitant.

In annuity contract, the insurer undertakes to pay certain level sums periodically up to death or expiry of the term. Since at the early death, the insurer does not suffer loss, no medical examination is necessary. However, evidence of age is essential at the time of proposal.

The annuity is beneficial to those who do not want to leave amount for others but want to use their money during their life-time. During the life-time, they may make maximum use of the money by purchasing annuity which is not possible otherwise.

In bank, he may leave certain amount at early, death or may suffer loss in living long due to stoppage of the money after a certain period. The payment of annuity generally continues up to the life. So the premium rate is determined according to longevity. The amount premium is higher at younger age and lower at advanced age.