Lifetime Payout Annuity

A A A

DEFINITION

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

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 a predetermined ...
  2. Annuity

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

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

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

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

    An insurance product that features a predetermined periodic payout amount until ...
  7. Reinsurer

    A company that provides financial protection to insurance companies.
  8. Pension Risk Transfer

    When a defined benefit pension provider offloads some or all of the plan’s ...
  9. Death Master File (DMF)

    Also known as Social Security Death Index. A list of people whose deaths were ...
  10. Level Death Benefit

    A life insurance payout that is the same whether the insured person dies shortly ...
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

  5. Lifetime Income Annuities: The Instant ...
    Options & Futures

    Lifetime Income Annuities: The Instant ...

  6. Variable Annuities: The Do-It-Yourself ...
    Options & Futures

    Variable Annuities: The Do-It-Yourself ...

  7. New Option For Beneficiaries: Reversionary ...
    Options & Futures

    New Option For Beneficiaries: Reversionary ...

  8. How Cash Value Builds In A Life Insurance ...
    Insurance

    How Cash Value Builds In A Life Insurance ...

  9. 6 Ways To Capture The Cash Value In ...
    Insurance

    6 Ways To Capture The Cash Value In ...

  10. What's the difference between Social ...
    Retirement

    What's the difference between Social ...

comments powered by Disqus
Hot Definitions
  1. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin account. In the context of the NYSE and FINRA, after an investor has bought securities on margin, the minimum required level of margin is 25% of the total market value of the securities in the margin account.
  2. Leased Bank Guarantee

    A bank guarantee that is leased to a third party for a specific fee. The issuing bank will conduct due diligence on the creditworthiness of the customer looking to secure a bank guarantee, then lease a guarantee to that customer for a set amount of money and over a set period of time, typically less than two years.
  3. Degree Of Financial Leverage - DFL

    A ratio that measures the sensitivity of a company’s earnings per share (EPS) to fluctuations in its operating income, as a result of changes in its capital structure. Degree of Financial Leverage (DFL) measures the percentage change in EPS for a unit change in earnings before interest and taxes (EBIT).
  4. Jeff Bezos

    Self-made billionaire Jeff Bezos is famous for founding online retail giant Amazon.com.
  5. Re-fracking

    Re-fracking is the practice of returning to older wells that had been fracked in the recent past to capitalize on newer, more effective extraction technology. Re-fracking can be effective on especially tight oil deposits – where the shale products low yields – to extend their productivity.
  6. TIMP (acronym)

    'TIMP' is an acronym that stands for 'Turkey, Indonesia, Mexico and Philippines.' Similar to BRIC (Brazil, Russia, India and China), the acronym was coined by and investor/economist to group fast-growing emerging market economies in similar states of economic development.
Trading Center