simple annuity 1

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Simple Annuities Defnition o Terms: An annuity is a sequence o equal payments made at regular intervals o time Payments may be made annually, semi-annually, quarterly, or at oter period Some e!amples o annuities are:  "# montly payments o rent,  $# %ee&ly %ages,  '# annual premiums on a lie insurance policy,  (# periodic pensions,  )# periodic payments on install ment purcases, and *# semi-annual interest payments on a bond. Annuities are classifed into annuity certain and contingent annuity: "# An annuity certain is an annuity in %ic payments begin and end at f!ed +nstallment payments are an annuity certain. $# A contingent annuity is an annuity %ose payments depend upon an event cannot be oretold accurately. ie insurance premiums are an e!ample o contingent annuity, because te payments ends at te deat o te insured. an insured %ould die is uncertain.

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