Annuity Due

What Does Annuity Due Mean?

An annuity due is a type of annuity offered by many life insurance companies. Unlike other types of annuities, where payments are made at the end of each interval, annuities due require payments to be made at the beginning of each interval. The payment interval can vary, such as monthly, quarterly, or annually, meaning the payments are due at the start of each month, quarter, year, etc. Because each payment lands at the start of the period, it earns interest for one extra cycle, which usually makes an annuity due pay out slightly more over the life of the contract than an annuity with end-of-period payments.

Insuranceopedia Explains Annuity Due

Annuities due are designed to generate a fixed income for retirement, which is why many people choose to purchase them as part of a life insurance policy. The way they work is that the policyholder makes payments at regular intervals over a specified period. Once the policyholder reaches retirement age, they can begin receiving fixed payments from the annuity that has accumulated over time. Many annuity due options continue making payments until the person passes away. Buyers often pair an annuity due with a policy from one of the best life insurance companies for seniors so that both retirement income and a death benefit are in place before they stop working. Pricing varies a lot between insurers, in the same way average life insurance costs do, so getting quotes from a few companies before signing a contract is worth the time.