Life Annuity
What Does Life Annuity Mean?
A life annuity is an arrangement between an annuitant and a financial institution to provide a regular income stream after retirement. This service is offered once the individual makes either a series of payments or a lump-sum payment to the institution.
Insuranceopedia Explains Life Annuity
After retirement, the annuitant can choose to receive payments for the rest of their life. This option is often best suited for annuitants without heirs, as payments cease upon the annuitant’s death.
Alternatively, they may select payments over a fixed period, in which case payments will continue to a designated beneficiary if the annuitant passes away before the period ends.
The annuitant can also opt to recover the principal amount by receiving payments until they equal the initial principal. Similar to the fixed-period option, if the annuitant dies before recovering the full principal, the remaining payments will go to a beneficiary.
