Annuity Payment Option

Annuity Payment Option

Either of two ways that one may elect to receive payments from an annuity. One may receive a fixed dollar amount each month, guaranteeing payments but exposing the annuitant to inflation risk. On the other hand, one may decide to receive variable payments, tying payments to the performance of some underlying portfolio. One generally decides which annuity payment option one wishes to receive upon purchasing the annuity.
References in periodicals archive ?
Each Jackpot Prize Winner of the CLCs Lotto Game may select an annuity payment option or a lump sum payment option.
The lifetime annuity payments are calculated based on certain characteristics of the annuitant, such as age at the time of any premium payment and gender; the Lifetime Annuity Payment Option; the amount of time before the annuity payments begin; the frequency of the annuity payments; and the purchase rates in effect at the time of initial premium or any additional premiums made thereafter.
The product's lifetime annuity payments are calculated based on certain characteristics of the annuitant, such as age at the time of any premium payment and gender; the lifetime annuity payment option; the amount of time before the annuity payments begin; the frequency of the annuity payments; and the purchase rates in effect at the time of initial premium or any additional premiums made thereafter.
To boost annuitization rates among retirees, the authors recommend that plan sponsors reduce search costs by incorporating life annuities into defined contribution retirement accounts as well as presenting participants a number of lifetime annuity payment options. In addition, plan sponsors were advised to provide access to basic financial education and unbiased financial advice to retirees before they make their selection.
Although defined benefit plans must offer annuity payment options under federal tax law, 401(k) plans and most other types of defined contribution (DC) plans are not subject to this requirement.
They have developed into an attractive insurance product that offers a comfortable middle ground between fixed income predictability and equity portfolio exposure, while still preserving other valuable features, such as death benefits and guaranteed annuity payment options.