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. Social Security

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

    The amount on a life insurance policy or pension that is payable ...
  3. Immediate Payment Annuity

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

    A type of retirement plan, usually tax exempt, wherein an employer ...
  5. Term Life Insurance

    A policy with a set duration limit on the coverage period. Once ...
  6. Annuity

    A financial product sold by financial institutions that is designed ...
RELATED FAQS
  1. No results found.
Related Articles
  1. Bonds & Fixed Income

    Explaining Types Of Fixed Annuities

    Learn about this popular retirement tool, its pros and cons and how annuities work to create a guaranteed regular stream of retirement income.
  2. Options & Futures

    New Option For Beneficiaries: Reversionary Annuities

    This vehicle can provide survivors with guaranteed income and lower premiums.
  3. Options & Futures

    Personal Pensions: Repackaging The Annuity

    Discover an investment that can provide a stable income once you've left the work force.
  4. Credit & Loans

    Reverse Mortgages: How To Find A Good One

    Finding a reverse mortgage generally means using a lender that specializes in them. Here's how to find a reputable one.
  5. Insurance

    Life Insurance: How Much Does Age Raise Your Rate?

    If you need life insurance, try to get it before your next birthday. Here's why.
  6. Retirement

    Healthcare: What Are You Really Paying For?

    Long-term care costs rise fast and long-term care providers bundle services together, making it tougher for families to understand what they are paying for
  7. Retirement

    4 Myths You Don’t Know About Medicare

    Here are four common misconceptions about Medicare, the federal government’s health insurance program for people who are 65 and older or disabled.
  8. Retirement

    Strategies To Build Your Retirement Portfolio

    Retirement indexes are designed to estimate how much an investor would need to have saved today to generate annual income in retirement, starting at 65.
  9. Investing

    Are You An Investor Seeking For More Income?

    For income-seeking investors, it's hard to turn down a double-digit dividend yield like that of Prospect Capital Corporation .
  10. Professionals

    Why Auto-Enrollment Will Save Your Retirement

    Savers need all the help they can get, even if it amounts to an offer they can't refuse. That's why the biggest improvement to 401(k)s is auto-enrollment.

You May Also Like

Hot Definitions
  1. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  2. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  3. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  4. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  5. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  6. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
Trading Center