Reversionary Annuities

A A A

DEFINITION

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

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. Death Benefit

    The amount on a life insurance policy or pension that is payable to the beneficiary ...
  2. Term Life Insurance

    A policy with a set duration limit on the coverage period. Once the policy is ...
  3. Permanent Life Insurance

    An umbrella term for life insurance plans that do not expire (unlike term life ...
  4. Life Option

    An annuitization-method option for a typical annuity offered by an insurance ...
  5. Annuity

    A financial product sold by financial institutions that is designed to accept ...
  6. Immediate Payment Annuity

    An annuity contract that is purchased with a single lump-sum payment and in ...
  7. Pension Plan

    A type of retirement plan, usually tax exempt, wherein an employer makes contributions ...
  8. Social Security

    A United States federal program of social insurance and benefits developed in ...
  9. Reinsurer

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

    When a defined benefit pension provider offloads some or all of the plan’s ...
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. 6 Good Reasons To Get Renter's Insurance
    Insurance

    6 Good Reasons To Get Renter's Insurance

  5. Last-Minute Strategies To Help Pay For ...
    Budgeting

    Last-Minute Strategies To Help Pay For ...

  6. Financial Advisors Need To Seek Out ...
    Retirement

    Financial Advisors Need To Seek Out ...

  7. Debunking the 80% Income Replacement ...
    Retirement

    Debunking the 80% Income Replacement ...

  8. An Analysis Of Social Security Benefits ...
    Retirement

    An Analysis Of Social Security Benefits ...

  9. Using The Social Security Website To ...
    Taxes

    Using The Social Security Website To ...

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

    How Cash Value Builds In A Life Insurance ...

comments powered by Disqus
Hot Definitions
  1. Cash and Carry Transaction

    A type of transaction in the futures market in which the cash or spot price of a commodity is below the futures contract price. Cash and carry transactions are considered arbitrage transactions.
  2. Amplitude

    The difference in price from the midpoint of a trough to the midpoint of a peak of a security. Amplitude is positive when calculating a bullish retracement (when calculating from trough to peak) and negative when calculating a bearish retracement (when calculating from peak to trough).
  3. Ascending Triangle

    A bullish chart pattern used in technical analysis that is easily recognizable by the distinct shape created by two trendlines. In an ascending triangle, one trendline is drawn horizontally at a level that has historically prevented the price from heading higher, while the second trendline connects a series of increasing troughs.
  4. National Best Bid and Offer - NBBO

    A term applying to the SEC requirement that brokers must guarantee customers the best available ask price when they buy securities and the best available bid price when they sell securities.
  5. 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.
  6. 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.
Trading Center