Combination Annuity

Combination annuity

See: Hybrid annuity

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Combination Annuity

An annuity that combines aspects of fixed annuities and variable annuities. In general, a combination annuity allows the annuity holder a fixed return, which the holder may convert into a variable return temporarily or for the life of the annuity. In this, an investor makes contributions to a fixed account and a variable account, which each function like their respective annuities. The investor may defer payments from both until retirement, but there is a degree of flexibility. For example, a person saving for retirement may invest in a combination annuity early in life and defer the fixed payments until retirement. However, if he/she loses a job at some point in his/her career, the investor may elect to receive variable payments until finding a new position. In any event, a combination annuity guarantees the investor a certain return while also allowing him/her access to market upswings. See also: Bull CD.