Just call us Bond. Amortized bond.
Over 700 finance terms, Shmooped to perfection.
When a lump sum is converted into regular payments over a chunk of time. If you have big chunk saved up with a retirement plan or life insurance, the amount will be annuitized so you get a regular income from your cash.
Let's say you've been saving up with a life insurance plan that's also an investment for your later years. You hit 65 and decide you've had enough of office politics. SnoopyInsurance agrees to annuitize the $500K you've set aside as an asset in the account and pay you $2,500 a month for the rest of your life, no matter how long you live—but the benefits stop the moment you do.
If you're one of those people who's convinced you're gonna Highlander it and live forever, great. But if you think you might be on the losing end of a Clamor and bite the dust sooner than expected, clearly you aren't going to get the best return on your investment.