Q: What is Annuitization?
A: Annuitization is the act of using your Account Value, at any future period, to purchase an Immediate Annuity (series of payments).
When you purchase an Immediate Annuity, you enter into a contract with an Insurance Company to purchase a guaranteed stream of payments to you.
The Insurance Company calculates the stream of payments (usually paid to you monthly) based on
Immediate Annuity Types:
"Annuitant" may be one person (you), or two people (you + spouse). In the first case, this is called "single-life". In the second case, this is called "joint life". Joint-life payments typically go on for longer, because as long as either one of the pair is alive, the "Annuitant" is considered alive.
A: Annuitization is the act of using your Account Value, at any future period, to purchase an Immediate Annuity (series of payments).
When you purchase an Immediate Annuity, you enter into a contract with an Insurance Company to purchase a guaranteed stream of payments to you.
The Insurance Company calculates the stream of payments (usually paid to you monthly) based on
- your Account Value (or some minimum guarantee if greater) at the time of Annuitization
- the type of Immediate Annuity that you elect
- the number of Annuitants
- the Annuitants' age and sex.
Immediate Annuity Types:
- Life-only: Payments continue as long as the Annuitant (you) lives.
- Period Certain Only: Payments (to you or your beneficiary) stop after a fixed period (e.g., 10 years), even if the Annuitant has died in the meantime.
- Period Certain then Life. This is just Period Certain Only, followed by Life-only (if you're still alive at that point).
"Annuitant" may be one person (you), or two people (you + spouse). In the first case, this is called "single-life". In the second case, this is called "joint life". Joint-life payments typically go on for longer, because as long as either one of the pair is alive, the "Annuitant" is considered alive.
