ANNUITY

annuity  (<<schwa>>-n[y]oo-<<schwa>>-tee).1.  An  obligation  to  pay  a  stated  sum,  usu.

monthly  or  annually,  to  a  stated  recipient.  •  These  payments  terminate  upon  the  death  of  the

designated beneficiary. [Cases: Annuities    1.C.J.S. Annuities §§ 2–4, 6–9, 21.] 2. A fixed sum of

money  payable periodically. 3. A right, often acquired under a life-insurance contract, to receive

fixed   payments   periodically   for   a   specified   duration.   Cf.   PENSION.   4.Patents.   See

MAINTENANCE FEE. 5. A savings account with an insurance company or investment company,

usu. established for retirement income. • Payments into the account accumulate tax-free, and the

account is taxed only when the annuitant withdraws money in retirement.

annuity  certain.An  annuity  payable  over  a  specified  period,  regardless  of  whether  the

annuitant dies. — Also termed term annuity.

annuity  due.An  annuity  that  makes  payments  at  the  beginning  of  each  pay  period.  Cf.

ordinary annuity.

cash-refund annuity.An annuity providing for a lump-sum payment after the annuitant’s death

of the difference between the total received and the price paid.

constituted annuity.Louisiana law. An annuity that has a maximum duration of ten years and,

under some circumstances, can be redeemed before the term’s expiration. La. Civ. Code art. 2796.

contingent  annuity.  1.  An  annuity  that  begins  making  payments  when  some  future  event

occurs,  such  as  the  death  of  a  person  other  than  the  annuitant.  2.  An  annuity  that  makes  an

uncertain number of payments, depending on the outcome of a future event.

continuing annuity.See survivorship annuity.

deferred annuity.An annuity that begins making payments on a specified date if the annuitant

is alive at that time. — Also termed deferred-payment annuity. Cf. immediate annuity.

fixed  annuity.An  annuity  that  guarantees  fixed  payments,  either  for  life  or  for  a  specified

group annuity.An annuity payable to members of a group, esp. employees, who are covered

by a single annuity contract, such as a group pension plan.

immediate annuity.An annuity paid for with a single premium and that begins to pay benefits

within the first payment interval. Cf. deferred annuity.

joint annuity.An annuity payable to two annuitants until one of them dies, at which time the

annuity terminates for the survivor (unless the annuity also provides for survivorship rights). See

survivorship annuity.

life annuity.An annuity payable only during the annuitant’s lifetime, even if the annuitant dies

life-income period-certain annuity.An annuity that pays a specified number of payments even

if the annuitant dies before the minimum amount has been paid. A

nonrefund annuity.An annuity with guaranteed payments during the annuitant’s life, but with

no refund to anyone at death. — Also termed straight life annuity; pure annuity.

ordinary annuity.An annuity that makes payments at the end of each pay period. Cf. annuity

private annuity.An annuity from a private source rather than from a public or life-insurance

pure annuity.See nonrefund annuity.

refund annuity.An annuity that, upon the annuitant’s death, pays to the annuitant’s estate the

difference  between  the  purchase  price  and  the  total  payments  received  during  the  annuitant’s

retirement  annuity.An  annuity  that  begins  making  payments  only  after  the  annuitant’s

retirement. • If the annuitant dies before retirement, an agreed amount will usu. be refunded to the

annuitant’s estate.

single-premium deferred annuity.An annuity for which a party pays a lump-sum premium in

exchange for receiving a specified sum at a future date. • The income earned on the investment is

tax-free until it is withdrawn. — Abbr. SPDA.

straight annuity.An annuity that  makes payments in fixed amounts at periodic intervals. Cf.

variable annuity.

straight life annuity.See nonrefund annuity.

survivorship  annuity.An  annuity  providing  for  continued  payments  to  a  survivor,  usu.  a

spouse, after the original annuitant dies. — Also termed continuing annuity.

tax-deferred annuity.See 403(b) plan under EMPLOYEE BENEFIT PLAN.

tax-sheltered annuity.See 403(b) plan under EMPLOYEE BENEFIT PLAN.

term annuity.See annuity certain.

variable  annuity.An  annuity  that  makes  payments  in  varying  amounts  depending  on  the

success  of  investment  strategy.  See  variable  annuity  contract  under  CONTRACT.  Cf.  straight

annuity.[Blacks Law 8th]