A contract by which a financial institution such as an insurance company agrees to provide a regular income for the remainder of the holder’s life. The name annuity arises from annual payments, but the payments can in fact be of any agreed frequency. The recipient will be a named person; it is also possible to contract for full or reduced payments for life to surviving spouses or other dependants. The payments may be either fixed in money terms, or index-linked. Annuities enable the recipients to spend their capital as well as their income without the danger of running out of funds before they die.