Lifetime Payout Annuity

AAA

DEFINITION of 'Lifetime Payout Annuity'

A type of insurance product that pays out a portion of the underlying portfolio of assets over the life of the investor. A lifetime payout annuity can provide fixed or variable payments. In a fixed payout scheme, the investor receives a fixed dollar amount for each payment, potentially with cost of living adjustments (COLA). Payouts under a variable payout scheme will fluctuate because payments are based on the value of the investments held in the annuity's portfolio.

INVESTOPEDIA EXPLAINS 'Lifetime Payout Annuity'

Investors may choose a lifetime payout annuity to head off the risk of outliving the amount of money set aside for retirement. Basically, the guaranteed payments for life reduce a person's longevity risk. However, this payout scheme can cause problems for those wanting to leave estates to heirs. Payouts from a lifetime payout annuity typically end with the death of the policyholder. The policyholder can purchase adjustments which allow payments to continue to an estate or which allow for a guaranteed number of payments, but these can result in a different payout.

RELATED TERMS
  1. Annuity Certain

    A financial instrument that provides a stream of payments, for ...
  2. Annuity

    A financial product sold by financial institutions that is designed ...
  3. Variable Annuity

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

    An insurance contract in which the insurance company makes fixed ...
  5. Annuity Contract

    The written agreement between an insurance company and a customer ...
  6. Life Annuity

    An insurance product that features a predetermined periodic payout ...
Related Articles
  1. Managing Income During Retirement
    Budgeting

    Managing Income During Retirement

  2. Explaining Types Of Fixed Annuities
    Bonds & Fixed Income

    Explaining Types Of Fixed Annuities

  3. An Overview Of Annuities
    Home & Auto

    An Overview Of Annuities

  4. Selecting The Payout On Your Annuity
    Options & Futures

    Selecting The Payout On Your Annuity

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center