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Simple English definitions for legal terms
nonrefund annuity
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A quick definition of nonrefund annuity:
An annuity is a type of payment that someone receives regularly, usually monthly or yearly. It can be like a savings account for retirement, where money is put in and grows tax-free until the person starts taking payments. There are different types of annuities, such as ones that pay for a certain number of years or ones that only pay for the person's lifetime. A nonrefund annuity is a type of annuity that pays the person for their whole life, but when they die, no one else gets any money back.A more thorough explanation:
A nonrefund annuity is a type of annuity that guarantees payments to the annuitant during their lifetime, but does not provide any refund to anyone upon their death. 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 John purchases a nonrefund annuity, he will receive guaranteed payments for the rest of his life. However, if John dies before receiving the full amount of his annuity, there will be no refund to his beneficiaries.
Nonrefund annuities are also known as straight life annuities or pure annuities. They are often used as a source of retirement income.