In investment, an annuity is a series of payments made at equal intervals based on a contract with a lump sum of money. Insurance companies are common annuity providers and are used by clients for things like retirement or death benefits. Examples of annuities are regular deposits to a savings account, monthly home mortgage payments, monthly insurance payments and pension payments. Annuities can be classified by the frequency of payment dates. The payments (deposits) may be made weekly, monthly, quarterly, yearly, or at any other regular interval of time. Annuities may be calculated by mathematical functions known as "annuity functions".

An annuity which provides for payments for the remainder of a person's lifetime is a life annuity. An annuity which continues indefinitely is a perpetuity.

Annuities may be classified in several ways.

Payments in an annuity-immediate are made at the end of each period, so interest accrues before the first payment. Payments in an annuity-due are made at the beginning of each period, so a payment is made at inception.

An annuity that pays over a fixed period is an annuity certain (also called a guaranteed annuity). An annuity paid only if stated conditions are met is a contingent annuity. A common example is a life annuity, which is contingent on survival. Certain-and-life annuities pay for a minimum number of years and thereafter only while the annuitant is alive.

A deferred annuity begins payments after a deferral period. An immediate annuity begins payments without a deferral period, typically at purchase.

Valuation of an annuity calculates the present value of its future payments. Key concepts include the time value of money, the per-period interest rate, and future value.

If the number of payments is known in advance, the contract is an annuity certain (also called a guaranteed annuity). Valuation uses the formulas below, which depend on the timing of payments.