The word annuity is used in finance theory to refer to any concluding stream of set payments over a precise period of time. This practice is most generally seen in deliberations of finance, usually in association with the assessment of the stream of payments, taking into account time value of money concepts such as interest rate and future value. Cases of annuities are habitual deposits to a savings account, monthly home finance payments and monthly indemnity payments. Annuities are classified by payment dates. The payments, which may also mean deposits, may be made at any period of time, depending on the negotiations, whether it would be weekly, monthly, quarterly, yearly, or at any other period of time.

This is one important factor in finance theory since it is basically the field that deals with the decisions that are made during an investment, and the concept of the time value of money. The method of time value of money also allows the estimation of a likely flow of revenue in the future, in such a way that the once a year incomes are discounted and then added as one, as a result providing a lump sum present value of the entire income stream.