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GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

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Annuity Ladder


Synonyms:annuity laddering, hedge your bets, multiple annuities
Filed Under: annuities, financial-banking, investments
Tags: annuity, banking, investment
 

Definition of annuity ladder

annuity ladder
1. A financial strategy where an individual buys a number of annuities in stages over a period of years. An individual may choose to use an annuity ladder if they wish to minimize interest rate risk yet still want the guaranteed income an annuity provides, also by purchasing annuities form different insurance companies the annuitant minimizes the risk of a total loss if an insurance company goes under.

Related Terms and Acronyms:

  • future value of an annuity (FVA)   The value of an annuity at some future date.
  • laddering   Staggering deposits into investments such as CDs in order to vary and better the rate of return.
  • split-funded annuity   Two annuities purchased together, one with a deferred payout and the other with an immediate payout.

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