# Life Expectancy Method

Definition

• 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).

Synonyms
certain method, recalculation method

## Related Terms and Acronyms

• Accumulation Period (AP) Acronym, Important,
• The period where an investor continues to put money into his or her investment(s).
• 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 Definition,
• A regular periodic payment made by an insurance company to a policyholder for a specified period of time.
• A financial instrument that disperses a number of payments over a set period of time.
• Annuity Factor Method Definition,
• A way of determining the maximum amount an annuitant can withdraw from an annuity before penalties are applied.
• Annuity Table Definition,
• A table that can be used to find the future value of an annuity.
• Commissioners' Reserve Valuation Method Definition,
• A method used to determine the minimum statutory reserves for annuities and insurance products.
• Deferred Annuity Definition,
• An annuity that makes payments to the annuitant at some date in future instead of immediately.
• Life Annuity Definition,
• An annuity that will continue to make payments until the death of the annuitant.
• Payout Phase Definition,
• The phase of a deferred annuity where the annuity begins to make payments to the annuitant.
• 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.
• Straight Life Annuity Definition,
• An annuity that stops all payments upon the annuitant's death.
• Substandard Health Annuity Definition,
• An annuity with increased income payments for people with shorter life expectancies due to medical conditions.
• 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).
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