Meaning of the model
An annuity is a sequence of equal payments at equal intervals. Depending on the task, these may be savings contributions, withdrawals or debt payments. The term does not mean one identical financial product, a lifetime income guarantee or equal repayment of principal.
Payment dates and debt
The calculation must state when each payment occurs: at the beginning or end of the period. The same number of contributions moved to the beginning works for longer. For debt, an equal payment is divided between interest and principal; CFPB explains how that composition changes as the balance declines.[1](#source-savx-amortization)
Limits of a simple formula
A useful check is to list every date, not only the number of months. If amounts or intervals differ, a simple annuity formula is insufficient and payments should be considered separately. Do not confuse an educational sequence with an insurance contract or another product using the same word. The legal content of such a contract must be established separately.