Simple English definitions for legal terms
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A cash-refund annuity is a type of annuity that provides for a lump-sum payment after the annuitant's death of the difference between the total received and the price paid. An annuity is an obligation to pay a stated sum, usually monthly or annually, to a stated recipient. These payments terminate upon the death of the designated beneficiary.
For example, if someone purchases a cash-refund annuity for $100,000 and receives $50,000 in payments before passing away, their beneficiary would receive a lump-sum payment of $50,000 to make up the difference between the total received and the price paid.
Cash-refund annuities are a way to ensure that the annuitant's beneficiaries receive some benefit from the annuity if the annuitant passes away before receiving the full value of the annuity. It provides a safety net for the annuitant's loved ones.