Life Expectancy Method

Importance: 0.57

Is a company: no

Is a proper noun: no

Synonyms

  • recalculation method
  • certain method

Definition of Life Expectancy Method

  1. A method used to determine the size of annuity payments that is calculated by dividing the value of the annuity by the annuitant's remaining life expectancy. For example, if a 65 year old woman has $1,000,000 saved in an annuity and has an estimated life expectancy of twenty years, by using the life expectancy method she should withdraw $50,000 from the annuity each year ($1,000,000 divided by 20).

Related Terms and Acronyms

  • Present Value Interest Factor of Annuity (PVIFA) Acronym,
    • A method used to find an annuity's present value.
  • Split-Funded Annuity Definition,
    • Two annuities purchased together, one with a deferred payout and the other with an immediate payout.
  • Life Annuity Definition,
    • An annuity that will continue to make payments until the death of the annuitant.
  • Commissioners' Reserve Valuation Method Definition,
    • A method used to determine the minimum statutory reserves for annuities and insurance products.
  • Substandard Health Annuity Definition,
    • An annuity with increased income payments for people with shorter life expectancies due to medical conditions.
  • Payout Phase Definition,
    • The phase of a deferred annuity where the annuity begins to make payments to the annuitant.
  • Accumulation Period (AP) Acronym, Important,
    • The period where an investor continues to put money into his or her investment(s).
  • Tax Deferred Annuity (TDA) Acronym, Important,
    • A type of annuity where taxes are deferred until the annuitant decides to withdraw money from the annuity.
    More commonly known as a Tax Sheltered Annuity (TSA).
  • Annuity Factor Method Definition,
    • A way of determining the maximum amount an annuitant can withdraw from an annuity before penalties are applied.
  • Straight Life Annuity Definition,
    • An annuity that stops all payments upon the annuitant's death.
  • Deferred Annuity Definition,
    • An annuity that makes payments to the annuitant at some date in future instead of immediately.
  • Annuity Definition,
    • A financial instrument that disperses a number of payments over a set period of time.
    • A regular periodic payment made by an insurance company to a policyholder for a specified period of time.
  • Annuitization Definition,
    • The process of turning a retirement plan or annuity into income in the form of periodic payments or a single lump sum.
  • Annuity Table Definition,
    • A table that can be used to find the future value of an annuity.
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