Stretch Annuity

AAA

DEFINITION of 'Stretch Annuity'

An annuity option where tax-deferred allowances are passed on to the beneficiaries, offering the beneficiaries more flexibility and control over maintaining the investment. Therefore, the beneficiary has less restraints on wealth transfer, and he or she is able to receive a larger sum of benefits stretched over a longer period of time.

INVESTOPEDIA EXPLAINS 'Stretch Annuity'

Legacy annuities or stretch annuities are not offered by many insurers, unfortunately. This type of annuity is very advantageous because the beneficiary isn't burdened with paying a huge tax bill on his or her gains. This often can be stressful for a family that has just dealt with the loss of a loved one.

RELATED TERMS
  1. Fixed Annuity

    An insurance contract in which the insurance company makes fixed ...
  2. Life Insurance

    A protection against the loss of income that would result if ...
  3. Annuity Contract

    The written agreement between an insurance company and a customer ...
  4. Deferred Annuity

    A type of annuity contract that delays payments of income, installments ...
  5. Variable Annuity

    An insurance contract in which, at the end of the accumulation ...
  6. Beneficiary

    Anybody who gains an advantage and/or profits from something. ...
Related Articles
  1. Investing Basics

    Calculating The Present And Future Value Of Annuities

    At some point in your life, you may have had to make a series of fixed payments over a period of time - such as rent or car payments - or have received a series of payments over a period of time, ...
  2. Bonds & Fixed Income

    Passing The Buck: The Hidden Costs Of Annuities

    These may look like good retirement vehicles, but beware of the fees buried in the fine print.
  3. Home & Auto

    An Overview Of Annuities

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

    Want To Leave Money To Your Family? Stretch Your IRA

    Find out how your beneficiaries can enjoy tax-deferred growth for as long as possible.
  5. Options & Futures

    Selecting The Payout On Your Annuity

    Make sure you understand your options for withdrawing your funds from this complex instrument.
  6. Options & Futures

    Personal Pensions: Repackaging The Annuity

    Discover an investment that can provide a stable income once you've left the work force.
  7. 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.
  8. Investing

    What are Fixed-Income Securities?

    For a fixed-income security, the periodic return on the investment is the same throughout the life of the security. Principal is returned at the time of maturity. The payment can be in the form ...
  9. Professionals

    Monthly Pension Or Lump-Sum: Which Is Better?

    When a client is faced with the choice of a monthly pension or a lump-sum payment, which one is better? Here's a quick guide on how to decide.
  10. Professionals

    Immediate Annuities: What To Watch Out For

    Immediate annuities can provide substantially higher monthly payouts than other fixed-income instruments, but also have some key limitations.

You May Also Like

Hot Definitions
  1. Fixed-Charge Coverage Ratio

    A ratio that indicates a firm's ability to satisfy fixed financing expenses, such as interest and leases. It is calculated ...
  2. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  3. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  4. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  5. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  6. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
Trading Center