Annuity

How to spell annuity

7 letters · 4 syllables

How to pronounce annuity

Say the part in capitals loudest.

What does annuity mean?

1. nounA financial product or contract that pays out a fixed sum of money at regular intervals, typically for the rest of a person's life or for a set term.

Annuity in a sentence

• On retirement she used her pension pot to buy an annuity that pays a guaranteed monthly income.

• The financial adviser compared a fixed-term annuity with leaving the money invested in the market.

Where does annuity come from?

Language of origin: Latin

The word comes ultimately from the Latin annus, meaning 'year', the same root that gives us 'annual', 'anniversary', and 'biennial'. From annus came the Medieval Latin annuitas, describing a yearly payment or allowance. English borrowed the word in the early 1400s by way of the Anglo-French annuite and Old French annuité, where it already named a fixed sum paid out each year. The financial sense has stayed remarkably stable across the centuries: an annuity is still essentially a 'yearly' arrangement, even where payments now arrive monthly. Keeping the Latin annus in mind explains the spelling trap, the double n and the single t, since the word is built on 'ann-' plus '-uity', not on any 'annoy' or '-uety' pattern.

How the word is built

• ann- (from Latin annus: year)
• -u-
• -ity (noun-forming suffix denoting a state or thing)