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An annuity is a financial product that pays out a fixed stream of payments to an individual, primarily used as an income stream for retirees..An annuity in perpetuity does not have a fixed time span but continues indefinitely and receipts can therefore come only from interest earned. Annuities can be obtained from pension funds or life insurance schemes. annuity. A sum of money received on a regular basis as one of a series of fixed payments..