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Simple English definitions for legal terms
refund annuity
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A quick definition of refund annuity:
An annuity is a type of payment plan where someone pays a certain amount of money regularly or all at once, and in return, they receive a fixed amount of money periodically. This can be for a set number of years or for the rest of their life. If the person dies before receiving all the payments, their beneficiary may receive the remaining amount. A refund annuity is a type of annuity that pays back the difference between the amount paid and the total received if the person dies before receiving all the payments.A more thorough explanation:
A refund annuity is a type of annuity that provides payments to the annuitant for their lifetime. Upon the annuitant's death, any remaining balance is paid to their estate. This type of annuity is often used as a form of retirement income.
For example, if an individual purchases a refund annuity for $100,000 and receives $50,000 in payments over their lifetime, the remaining $50,000 would be paid to their estate upon their death.
Refund annuities provide a sense of security for the annuitant, as they know that any remaining balance will be paid to their loved ones. This type of annuity is often preferred by those who want to ensure that their heirs receive some benefit from their investment.