What Does Life Annuity Mean?
A life annuity is an arrangement between an annuitant and a financial institution for a regular schedule of payments to serve as income after retirement. This service is rendered after the person who wants to avail of it makes a series of payments or a lump sum payment to the institution.
Insuranceopedia Explains Life Annuity
After retirement, the annuitant can opt to receive payments for the remainder of their life. This arrangement is mostly suitable for annuitants who don't have any heirs, since payments will stop after the annuitant's death.
They might also decide to have payments issued over a fixed period. In that case, the payments will continue to be disbursed to a beneficiary if the annuitant dies.
The annuitant can also decide to recoup the principal payment by letting the company pay them until the payments reach the amount that matches the principal. Like a fixed period of payments, if the annuitant dies before the principal is recouped, the payments will be issued to a beneficiary.