What Is Life Insurance Annuity?

by Prisca Rollins

Overview

An annuity provides income for a specified period of years. It is used to provide financial protection against the risk of living too long and outliving your income. An annuity is a way to accumulate money for a retirement pension plan.
No Death Benefit

An annuity is paid while living, if you die before your retire, your beneficiary only receives what you paid into it there is no death benefit.

Money

There are three ways to pay for annuities. Single Premium Immediate, paid in one payment and payout is immediate. Single Premium Deferred, paid once and payout intervals are deferred. Installment Deferred, payments are made over years and payout starts at a predetermined time in the future.
Joint and Life Survivor Annuity

The Joint and Life Survivor Annuity is payable to both annuitants while they are living and to the survivor until his death.
Annuity Value

An annuity value is determined by age, assumed rate of interest, gender, income amount and any guarantees.
Uses for Annuities

Annuities can be used for retirement income, for tax shelters or retirement income insurance. Annuities can be bought individually or through group coverage. Some companies accumulate funds to buy annuities in a retiring employee's name as the employee's retirement plan.