Glossary
Annuity
An annuity is a life insurance product that pays a regular income, usually for life or for a fixed period, in exchange for a lump sum or series of premiums.
Annuity explained
An annuity turns savings into income. A person, often at retirement, pays a lump sum to an insurer, and the insurer pays back a regular amount, for example monthly, for the rest of their life or for an agreed number of years.
Annuities can be immediate, where payments start straight away, or deferred, where premiums are paid now and income starts later. Some include a guarantee period so payments continue to a beneficiary if the annuitant dies early, and some increase each year to keep up with inflation. Terms vary by insurer and product.
Why it matters in life insurance
Annuities are how many pension savings in Zambia are converted into retirement income, and they involve long-term commitments that must be reserved for carefully. Ontech LifeI ERP administers immediate and deferred annuities with payment schedules, guarantee periods and the actuarial reporting they require.