Annuiteettiperiaatteella

Annuiteettiperiaatteella is a Finnish term that translates to "on an annuity basis" or "in the form of an annuity." It refers to a payment structure where a series of equal payments are made at regular intervals over a specified period. This principle is commonly applied in financial contexts, particularly in relation to loans, pensions, and insurance.

When a loan is repaid on an annuity basis, each payment includes both a portion of the principal and the interest accrued. Initially, the interest portion is larger, and as the loan progresses, the principal repayment portion increases while the interest portion decreases. This results in a consistent total payment amount throughout the loan's term.

In the context of pensions, an annuity basis means that a retiree receives a fixed stream of income payments at regular intervals, typically monthly, for the rest of their life or for a predetermined period. This provides a predictable income source. Similarly, insurance policies may offer payouts on an annuity basis, providing beneficiaries with regular payments rather than a lump sum. The core idea of the annuity principle is the consistent and regular distribution of funds over time.