Simple English definitions for legal terms
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A life annuity is a type of financial agreement where an individual pays a lump sum of money to an insurance company or investment company in exchange for regular payments for the rest of their life. These payments stop upon the death of the individual. It is like a savings account that is established for retirement income. There are different types of annuities, such as fixed annuity, variable annuity, and straight life annuity. An annuity can be a good option for those who want a guaranteed income stream during their retirement years.
A life annuity is a type of annuity that provides a fixed sum of money payable periodically, usually monthly or annually, to a stated recipient. The payments continue until the death of the designated beneficiary. It is a right, often acquired under a life-insurance contract, to receive fixed payments periodically for a specified duration.
For example, if someone purchases a life annuity, they may receive a fixed monthly payment for the rest of their life. If they pass away, the payments stop, and the insurance company keeps the remaining funds.
There are different types of annuities, such as:
These examples illustrate the different types of annuities that exist and how they work. A life annuity is just one type of annuity that provides a fixed income for life.