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Simple English definitions for legal terms
contingent annuity
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A quick definition of contingent annuity:
A contingent annuity is a type of payment plan that only gives money to the person entitled to it if certain conditions are met. This is often used for life insurance or pensions, where the payment is contingent on the person being alive or deceased. It is different from a contingent annuitant, which is a person who only receives payments if the primary recipient has passed away.
A more thorough explanation:
A contingent annuity is a type of annuity that is dependent on certain conditions or terms that must be met before the beneficiary can receive payments. This type of annuity is commonly used for life insurance and pensions, where the payments are contingent on the person being alive or deceased.
For example, a pension plan may offer a contingent annuity that pays out only if the retiree lives to a certain age. If the retiree dies before reaching that age, the payments would stop. Similarly, a life insurance policy may offer a contingent annuity that pays out only if the insured person dies.
It is important to note that a contingent annuity is different from a contingent annuitant. A contingent annuitant is a secondary annuitant who receives payments only upon the passing of the primary annuitant.
Overall, a contingent annuity provides a way for individuals to plan for the future while also protecting against unexpected events. By understanding the conditions and terms of the annuity, individuals can make informed decisions about their financial future.