Payout Phase

DEFINITION of 'Payout Phase'

The phase in an annuity during which payments are made to the annuitant. These are usually paid on a monthly basis and last for the lifetime of the annuitant. The income received from an annuity by a retired investor is considered taxable income.

BREAKING DOWN 'Payout Phase'

When an annuitant is ready to begin receiving payments from his/her annuity, he/she notifies the insurance company of his/her decision to do so. Actuaries use mathematical models and life expectancy tables to compute payment amounts which will last for the life of the annuitant (the longer you wait, the larger your payments will be). Most annuities have a minimum age at which an annuitant can begin the payout phase without incurring an early withdrawal penalty, and they can also include provisions to continue payments until both the annuitant and his/her spouse are deceased.

RELATED TERMS
  1. Contingent Annuitant

    Someone designated by an annuitant to receive the annuitant’s ...
  2. Guaranteed Minimum Income Benefit ...

    A type of option that annuitants can purchase for their retirement ...
  3. Straight Life Annuity

    An insurance product that makes periodic payments to the annuitant ...
  4. Whole Life Annuity Due

    A financial product sold by insurance companies that requires ...
  5. Assumed Interest Rate - AIR

    The rate of interest, or growth rate, selected by an insurance ...
  6. Annuitization Method

    A type of annuity distribution structure that gives the annuitant ...
Related Articles
  1. ETFs & Mutual Funds

    Annuities

    What annuities are: Insurance products that provide a source of monthly, quarterly, annual or lump sum income during retirement. Pros: Tax-deferred growth of earnings; no annual contribution ...
  2. Retirement

    Analyzing The Best Retirement Plans And Investment Options: Annuities

    What they are: Insurance products that provide a source of monthly, quarterly, annual or lump sum income during retirement. Pros: Tax-deferred growth of earnings; no annual contribution limit; ...
  3. Retirement

    Variable Annuities With Living Benefits: Worth The Fees?

    Added features can make a variable annuity suitable for certain investors. Find out if it could work for you.
  4. Financial Advisor

    Advising FAs: Explaining Annuities to a Client

    Conceptually speaking, annuities can be thought of as a reverse form of life insurance.
  5. Trading

    Selecting The Payout On Your Annuity

    Make sure you understand your options for withdrawing your funds from this complex instrument.
  6. Retirement

    Maximize the Tax Benefit from Your Annuity

    Understand how nonqualified annuities are taxed during your lifetime, and how they are taxed when passed on to your beneficiaries.
  7. Retirement

    How a Fixed Annuity Works After Retirement

    These popular investments can provide a steady stream of income during your retirement years. Here are the details.
  8. Financial Advisor

    Annuities and Baby Boomers: The Pros and Cons

    The pros and cons of annuities that Baby Boomers seeking retirement income need to know.
  9. Personal Finance

    An Overview Of Annuities

    These contracts provide a guaranteed income stream. Learn how they work and their benefits.
  10. Retirement

    Immediate Annuities: Guaranteed Payout At A Price?

    This vehicle can have very low, or even negative, rates. Find out when it pays to invest.
RELATED FAQS
  1. What happens to my annuity after I die?

    Understand the different types of annuity payment plans and what payments or additional benefits are payable to your beneficiaries ... Read Answer >>
  2. What should my 85 year-old mother do with a deferred annuity she purchased in 1992?

    Retirement of the plan is May 2016. She had a one time investment and has never taken money out of the plan. ... Read Answer >>
  3. What is the difference between a fixed and variable annuity?

    Understand the difference between fixed, variable and indexed annuities, and read a brief summary of their respective risks ... Read Answer >>
  4. 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 ... Read Answer >>
  5. For what types of financial instruments would I want to calculate the present value ...

    Learn about the types of financial instruments the present value of an annuity calculation is most useful for, including ... Read Answer >>
  6. Are variable annuities tax deferred?

    Learn how variable annuities are tax-deferred, but also understand some of the less advantageous tax implications from purchasing ... Read Answer >>
Hot Definitions
  1. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  2. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  3. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  4. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
  5. Enterprise Value (EV)

    A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is ...
  6. Security

    A financial instrument that represents an ownership position in a publicly-traded corporation (stock), a creditor relationship ...
Trading Center