Life Annuity


DEFINITION of 'Life Annuity'

An insurance product that features a predetermined periodic payout amount until the death of the annuitant. These products are most frequently used to help retirees budget their money after retirement. Typically, the annuitant pays into the annuity on a periodic basis when he or she is still working. However, annuitants may also buy the annuity product in one large purchase. When the annuitant retires, the annuity makes periodic (usually monthly) payouts to the annuitant, providing a reliable source of income. When a triggering event (such as death) occurs, the periodic payments from the annuity usually cease.

BREAKING DOWN 'Life Annuity'

Because of the complex nature of annuity products and their implications for the annuitant's standard of living, people are well advised to consult a reputable professional before purchasing any annuity product.

Due to the tax-preferred nature of annuities, very wealthy investors or above-average income earners often use these life insurance products to transfer large sums of money or to mitigate the effects of taxes on their annual income.

  1. Certain And Continuous

    A type of annuity that guarantees a number of payments, even ...
  2. Deferred Annuity

    A type of annuity contract that delays payments of income, installments ...
  3. Life Insurance

    A protection against the loss of income that would result if ...
  4. Fixed Annuity

    An insurance contract in which the insurance company makes fixed ...
  5. Triggering Event

    1. A tangible or intangible barrier or occurrence that, once ...
  6. Variable Annuity

    An insurance contract in which, at the end of the accumulation ...
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