Definition of annuity - What it is, Meaning and ConceptAnnuity is a concept that refers to the condition of annual: that extends for a year or that is repeated every year. The notion is also used to name the annual amount that generates or represents a specific monetary load.
The annuity, in this frame, can be a series of deposits or payments that are specified in temporary intervals that occur regularly. Beyond what is specified by the concept itself, it is known as annuity to all sequence of payments in regular periods, even when they are not annual.
Based on all the above we find a variety of types of annuities such as the following:
-Annual ordinary. It is also known as an annuity due and refers to the fact that the payment that corresponds to a certain time is made at the end of it. Thus, for example, it may take place at the end of the month.
-Annual advance. Under this other term is that annuity that is given in such a name when the corresponding payment is made at the beginning of what is the interval or period of time in question. In this way, it can be done at the beginning of the month, for example.
In addition to everything indicated, we can state that there are many types of annuities. Specifically, in order to classify them you can resort to the use of different criteria. However, among these most frequent criteria are the nature of the effective payment commitment, what is the status of the tax, the nature of the investment, the agreement to pay the premium or even the main purpose.
The depreciation and impositions are annuities. Salaries, payment of mortgages, pensions, pensions, rents and insurance premiums can also receive this name.
The most common use of the term, however, is associated with the periodic economic movement that involves compound interests. In this context, the annuity consists of the term (the extension), the payment period (how much time separates one payment from the other), the rent (the deposit or periodic payment) and the annual rent (the sum of the payments as over a year).
In the Roman Empire, the annuity governed the exercise of the different ordinary magistracies, with the exception of the dictator. Through the annuity it was established that the praetor, the consul, the aedile and other officials fulfilled their functions for a year. In this way, the Romans elected these magistrates every year, renewing the charges. Only in extraordinary situations could the mandate of the praetors and the consuls be extended.