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Simple English definitions for legal terms
constituted annuity
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A quick definition of constituted annuity:
An annuity is a type of payment that someone receives regularly, like every month or year. It can be a fixed amount of money or based on investments. An annuity can be for a certain amount of time or for the rest of someone's life. When the person who is supposed to receive the annuity dies, the payments stop. There are different types of annuities, like ones that start right away or ones that start later. Some annuities also have options for payments to continue to a spouse or for a refund if the person dies before receiving all the payments.A more thorough explanation:
A constituted annuity is a type of annuity that has a maximum duration of ten years and can be redeemed before the term's expiration under certain circumstances. It is a fixed sum of money payable periodically, usually monthly or annually, to a stated recipient. The payments stop upon the death of the designated beneficiary.
For example, if John purchases a constituted annuity that pays him $1,000 per month for ten years, he will receive $1,000 every month for ten years. If John dies before the ten-year term is up, the payments will stop, and his beneficiaries will not receive any further payments.
Constituted annuities are governed by Louisiana law and are different from other types of annuities, such as life annuities or variable annuities.