Lifetime Payout Annuity


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.

BREAKING DOWN '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.

  1. Annuity

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

    The written agreement between an insurance company and a customer ...
  4. Fixed Annuity

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

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

    An insurance product that features a predetermined periodic payout ...
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