- An option afforded to the beneficiaries of select life insurance policies or annuities that gives them the opportunity to change the method or frequency of benefit payments. Commutation can allow a beneficiary to receive benefits in the form of a single lump-sum payment instead of a series of smaller payments over a number of years or vice verse, depending on the terms of the policy.
substitution, compensation, replacement, exchange, interchange
Related Terms and Acronyms
- Annuity Consideration — Definition,
- The payment(s) made by an individual in order to accumulate value in an annuity.
- Commissioners' Reserve Valuation Method — Definition,
- A method used to determine the minimum statutory reserves for annuities and insurance products.
- Death Benefit (DB) — Acronym, Very Important,
➥ An amount paid to a beneficiary in a life linsurance policy.
- A payment or series of payments made to the beneficiaries of a life insurance policy.
- Lump Sum Payment — Definition,
- One-time single-sum payment or payout.
- An extra payment made to reduce a loan.