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GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

How often this word is used
 
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50% - Moderately

Commutation


Synonyms:compensation, exchange, interchange, replacement, substitution
Filed Under: annuities, estate-management, financial-banking, insurance, investments
Tags: annuity, banking, insurance, investment, life insurance
 

Definition of commutation

commutation
1. 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.

Related Terms and Acronyms:

  • annuity consideration   The payment(s) made by an individual in order to accumulate value in an annuity.
  • commissioners' reserve valuation method   A method used to determine the minimum statutory reserves for annuities and insurance products.
  • death benefit (DB)   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   One-time single-sum payment or payout.

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