Reversionary Annuities

AAA

DEFINITION of 'Reversionary Annuities'

A retirement income strategy that combines an insurance policy with an immediate annuity to provide for a surviving spouse. Similar to a permanent life insurance policy, the policy owner of a reversionary annuity pays a premium to guarantee a benefit to the survivor. With a reversionary annuity, upon the insured's death, the beneficiary receives a guaranteed lifetime income instead of a lump sum payment.

INVESTOPEDIA EXPLAINS 'Reversionary Annuities'

Because the income payments will cease upon the death of the beneficiary, and if the beneficiary dies before the insured the policy is terminated, premiums are more consistent with those of term insurance policies than permanent policies. This makes the reversionary annuity more affordable for older individuals.

RELATED TERMS
  1. Annuity

    A financial product sold by financial institutions that is designed ...
  2. Immediate Payment Annuity

    An annuity contract that is purchased with a single lump-sum ...
  3. Pension Plan

    A type of retirement plan, usually tax exempt, wherein an employer ...
  4. Social Security

    A United States federal program of social insurance and benefits ...
  5. Death Benefit

    The amount on a life insurance policy or pension that is payable ...
  6. Term Life Insurance

    A policy with a set duration limit on the coverage period. Once ...
Related Articles
  1. Explaining Types Of Fixed Annuities
    Bonds & Fixed Income

    Explaining Types Of Fixed Annuities

  2. Personal Pensions: Repackaging The Annuity
    Options & Futures

    Personal Pensions: Repackaging The Annuity

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

    New Option For Beneficiaries: Reversionary ...

  4. Retire Abroad: Cosmopolitan Cities
    Retirement

    Retire Abroad: Cosmopolitan Cities

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