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Annuity certain |
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Annuity certainAn annuity that pays a specific amount on a monthly basis for a set amount of time.Annuity certainSee 'annuity'.Similar MatchesAnnuityAnnuityThe payment of a regular income by a life company to an annuitant in exchange for a lump sum either for life or shorter periods.Annuities are typically used for pensions and the individual receiving the annuity is known as an annuitant. In the UK they can broadly be classified into two types:A Compulsory purchase annuity which is bought from the proceeds of a pension fund and is taxable as earned incomeA purchased life annuity which is bought with an individual's own capital and is taxed at a lower rate than a compulsory purchase annuity.There are three different types of pension annuities, commonly referred to as standard annuities, with-profits annuities and unit-linked annuities.Standard pension annuities are the most commonly purchased and account for over ninety percent of the UK market. The income from a standard pension annuity is guaranteed for the rest of the annuitant's life whereas the income from a with-profits or unit-linked annuity will fluctuate depending on the investment performance of the underlying assets. There are various options which can be provided including:Annuity certain: Income is paid for a given period whether or not death of the individual occursDeferred annuity: Income which does not commence until some future specified dateEscalating annuity: Income which increases annually by a given amount, for example 3%. The choosing of this option results in lower income compared with a level annuity over the initial yearsImmediate annuity: An annuity which starts to pay income soon after it has come into operation, for example at the end of the month following the payment of the lump sumJoint life annuity: Income usually relevant to two people (for example man and wife) which continues until the death of the first person onlyJoint life and survivor annuity: Income usually relevant to two people (for example man and wife) which continues until the death of the second personLevel annuity: Income which is paid at a fixed rate throughout the life of the individual. See also guaranteed minimum periodTemporary annuity: Income is paid either for a fixed period or until earlier death. Single life annuitySingle life annuityAn annuity covering one person. A straight life annuity provides payments until death, while a life annuity with a guaranteed period provides payments until death or continues payments to a beneficiary for a guaranteed term, such as ten years. Deferred payment annuityDeferred payment annuityAn annuity that stipulates payments be made to the annuitant at a later date, such as when the annuitant reaches a certain age. Single Premium Deferred Annuity (SPDA)Single Premium Deferred Annuity (SPDA)An IRA-like annuity into which an investor makes a lump-sum payment that is invested in either a fixed-return instrument or a variable-return portfolio, which is taxed only when distributions are taken. Variable annuityVariable annuitySee: 'annuity'. Further Suggestionscompulsory purchase annuityWraparound annuity escalating annuity joint life annuity Equivalent annual annuity fixed annuity Immediate payment annuity annuity starting date Qualifying annuity Tax sheltered annuity Annuity in arrears temporary annuity Joint and survivor annuity retirement annuity contract (RAC) Deferred nominal life Annuity reverse annuity mortgage Annuity starting date joint life and survivor annuity purchased life annuity Annuity factor Life annuity annuity deferral Annuity due Reverse annuity mortgages (RAM) qualifying annuity |
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