Commutation

Definition

  • 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.

Synonyms
exchange, replacement, substitution, compensation, 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,
    • A payment or series of payments made to the beneficiaries of a life insurance policy.
    An amount paid to a beneficiary in a life linsurance policy.
  • Lump Sum Payment Definition,
    • An extra payment made to reduce a loan.
    • One-time single-sum payment or payout.
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