Investopedia

Continue to Site »

Commutation

Filed Under » ,
Dictionary Says

Definition of 'Commutation'

The right that a beneficiary has to exchange one type of income for another. Commutation is offered to beneficiaries of annuities and life insurance policies, so that they might receive a lump-sum payment instead of a series of future payments. When this happens, the net present value of all remaining payments is computed into a single payment that is given to the beneficiary.
Investopedia Says

Investopedia explains 'Commutation'

The right of commutation can provide a larger sum of money to a beneficiary who needs it now. This can be a tremendous boon for those who need cash to pay for medical or other bills that cannot wait. However, this right must be accorded to the beneficiary in the policy.

Articles Of Interest

  1.

    Is Your Insurance Company Going Belly Up?

    When insurance companies go bankrupt or face financial difficulty, it's bad news for policy holders.

  2. Why Your Will Should Name Designated Beneficiaries

    Find out how to make the tough decisions when it comes to choosing who will receive your assets and how they will be paid out.

  3. Is there more to insurance policies than price?

    Yes, policyholders should also take a serious look at the financial stability of their current insurance company especially if annuities or cash value life insurance are involved. During the ...

  4. Why might one insurance policy cost more than another?

    There are several reasons that an insurance policy can cost more or less at different agencies. Some of the more common reasons include the following:a) Economies of scale - Larger agencies can ...

  5. How To Buy Annuities (And When Not To)

    Annuities are complicated products that require some basic homework to be done before requesting quotes. Retirees will want to think about how they envisage their lifestyle and even their potential ...

  6. Top 5 Budgeting Questions Answered

    You don't need a degree to understand your money, begin saving and pay down debt.

  7. 5 Ways To Stretch Your Retirement Budget

    Living comfortably can be easy if you follow a simple plan.

  8. What is an annuity?

    An annuity is a contract between you and an insurance company in which you make a lump sum payment or series of payments and in return obtain regular disbursements beginning either immediately ...

  9. Tax Variations Of The HEART Act

    The HEART Act is designed to allow service members and reservists make a smooth financial transition into active duty and back into civilian life.

  10. 8 Qualities That Make A Good Insurance Agent

    Insurance agents must possess each of the following qualities in order to be successful.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Validation Period

    The amount of time necessary for the premium on an insurance policy to cover the commissions, the cost of investigation, medical exams and other expenses associated with the issuance of the policy.

  2. Winner's Curse

    Because of incomplete information, emotions or any other number of factors regarding the item being auctioned, bidders can have a difficult time determining the item's intrinsic value. As a result, the largest overestimation of an item's value ends up winning the auction.

  3. Glocalization

    A combination of the words "globalization" and "localization" used to describe a product or service that is developed and distributed globally, but is also fashioned to accommodate the user or consumer in a local market.

  4. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  5. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  6. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.
Trading Center