You know how Steam has a handy refund feature
that lets you refund games that are less than two weeks old which you haven't played for more than two hours?
Since it does not have a refund feature
, customers have to pay only the amount to be used.
This is multiplied by the lesser of the unadjusted investment in the contract ($100,000) or the guaranteed return ($132,000) to determine the value of the refund feature
Purchase an income annuity: Assume the investor purchases an income annuity with an installment refund feature
and fixed annual increases of 3 percent each year.
Further, if it is permanent life insurance, this solution has a partial refund feature
in the form of cash values.
Accordingly, this refund feature
also should be disregarded in determining whether a transfer has occurred.
One solution would be to have a cash refund feature
on the annuity, Statman suggests.
The Contracts are available in several different forms, including a straight life annuity, a life annuity with a guarantee period, and a life annuity with various types of refund features
. In addition, the Contracts can be payable for a single life or for joint lives, and include a cash withdrawal feature and an acceleration feature.
Given the numerous ways immediate annuities can be designed to include cash refund features
, period-certain payments, inflation-adjusted payments, and joint life income streams, it is possible to use one or more immediate annuities to design a plan of guaranteed income that meets many financial consumer's desires.