**5, 10, 15 or 20 years**. You'll get a payout either monthly, quarterly or yearly for the length of that period. You can also purchase a lifetime annuity, which pays out for the rest of your life.

## What is an annuity and how is it calculated?

The term “annuity” refers to the series of periodic payments to be received either at the beginning of each period or at the end of the period in the future. The formula for annuity payment and annuity due is calculated based on PV of an annuity due, effective interest rate and a number of periods.

## What happens when an annuity expires?

Once an annuity expires, the contract terminates and no future payments are made. The contractual obligation is fulfilled, with no further duties owed from either party. An annuity due is an annuity with a payment due or made at the beginning of the payment interval. In contrast, an ordinary annuity generates payments at the end of the period.

## Why do annuities have to be paid monthly?

Meanwhile, the individual paying the annuity due has a legal debt liability requiring periodic payments. Because a series of annuity due payments reflect a number of future cash inflows or outflows, the payer or recipient of the funds may wish to calculate the entire value of the annuity while factoring in the time value of money.