It's an investment. It usually involves putting in a lump sum of money. In return, you're guaranteed a specific payout or return for as long as you live.

There are some variations. For instance, if you're married, the annuity might continue paying your spouse after you die.

Basically, you're betting you'll live a long time--long enough to recover all the money you used to buy the annuity and more. The annuity seller is betting that you die pretty soon so that it won't have to pay much out.

The percent return on what you put in varies. It's higher the older you are when you buy the annuity. For example (just making this up), if you buy an annuity when you're 60, you might get a guaranteed 4% return. If you buy it when you're 80, you might get a guaranteed 7% return.

Hope that helps.

An annuity is a series of equal periodic payments made at the end of each period.

In brief, Amt of return u get per annum is called annuity