Annuity Unit

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DEFINITION of 'Annuity Unit'

An accumulation unit for which the annuitant has annuitized their contract. This is a sub-account of the retiree's total accumulated annuity. These units represent a fixed share of ownership of the insurer's accounts portfolio.

INVESTOPEDIA EXPLAINS 'Annuity Unit'

When an insured person changes from accumulating wealth to spending their savings, they begin to draw on their saved money to finance their retirement. While saving, the insured party has made periodic payments to their life insurance company to purchase shares of ownership of a very large portfolio managed by the insurer. When the insured wants to start taking money out, they convert their total accumulated savings to start paying them their income. In order to accomplish this, the insured party purchases annuity units with the money that was formerly being saved as accumulation units.

RELATED TERMS
  1. Annuitization

    The process of converting an annuity investment into a series ...
  2. Annuity Contract

    The written agreement between an insurance company and a customer ...
  3. Annuitant

    1. A person who receives the benefits of an annuity or pension. ...
  4. Spending Phase

    The period in a person's life following retirement in which earning ...
  5. Accumulation Phase

    1. A period of time when an annuity investor is in the early ...
  6. Accumulation Unit

    1) In the case of a variable annuity, a measurement of the value ...
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