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annuity |
Also found in: Dictionary/thesaurus, Legal, Financial, Wikipedia, Hutchinson | 0.04 sec. |
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annuity: see insurance insurance or assurance, device for indemnifying or guaranteeing an individual against loss. Reimbursement is made from a fund to which many individuals exposed to the same risk have contributed certain specified amounts, called premiums. ..... Click the link for more information. . annuityPayment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. Under an annuity certain, a specified number of payments are made, after which the annuity stops. With a contingent annuity, each payment depends on the continuance of a given status; for example, a life annuity continues only as long as the recipient survives. Contingent annuities such as pension plans or life insurance depend on shared risk. Everyone pays in a fixed amount until the annuity begins; some will not live long enough to receive back all the money they have paid, while others will live long enough to collect more than they have paid. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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Annuitizing conservative assets allows them to work harder, "and then you've allowed those other less-conservative investments to grow and to build, hopefully," he said. For instance, if a company annuitized one-third of a plan's liabilities (by annuitizing its retirees), then one-third of the deferred gain is immediately recognized as income under FAS 88. You can avoid this dilemma by annuitizing a private pension, but since annuity-purchasers tend to live longer, insurance companies charge a steep premium for this service. |
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