Life Annuity

A "Life Annuity" is a financial product offered by insurance companies that provides the annuitant (the individual receiving the benefits) with a series of payments for the remainder of their life in exchange for an initial lump sum payment or a series of payments. The primary purpose of a life annuity is to provide financial security and a steady income stream during retirement, ensuring that the annuitant does not outlive their savings.

Key features of a Life Annuity include:

  1. Guaranteed Income: Life annuities offer a guaranteed income for life, regardless of how long the annuitant lives, providing peace of mind and financial stability in retirement.
  2. Payment Options: There are various payment options available, including fixed annuities, which provide a constant payment amount, and variable annuities, where payments can fluctuate based on the performance of the underlying investment options.
  3. Single or Joint Life: Life annuities can be structured as single life, providing income for the life of one individual, or joint life, which continues payments until the death of the second annuitant, often a spouse.
  4. Deferred or Immediate: Annuities can be immediate, beginning payments shortly after the initial investment, or deferred, starting payments at a future date, allowing the investment to grow over time.
  5. Inflation Protection: Some life annuities offer options to protect against inflation, adjusting the payment amount periodically to maintain purchasing power.
  6. Death Benefit: Depending on the terms of the annuity, there may be a death benefit available to beneficiaries if the annuitant dies before receiving payments equal to the premium paid.

Life annuities are a popular choice for retirement planning, offering a reliable source of income that helps manage the risk of outliving one's assets. By converting a portion of their retirement savings into a life annuity, individuals can ensure they have a steady income to cover essential expenses throughout their retirement years.

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