Life Annuity
A life annuity is a plan for distributing funds provided to the insurance company by the Florida annuity holder(s). Typically a life annuity provides level, regular, lifelong payments to the holder. The contract terminates with the holder’s death and any undistributed funds revert to the insurance company. Since the Florida annuity payout is geared to the life expectancy of the holder, the insurance company bears the risk that the holder’s life will exceed expectancy however they benefit should the holder experience an early death; the law of large numbers guarantees that the former and latter typically cancel each other out over time.
Most annuities provide for a death-benefit option which allows the holder to designate one or more beneficiaries. In the event of the annuity holder’s death, the beneficiary would receive a minimum of all the undistributed premiums, minus any partial withdrawals. There are ways of enhancing the death benefit but they require you to incur higher expense charges. A period-certain Florida annuity requires payment of annuity benefits for a designated time period; the beneficiary (or the estate) receives the payments if the holder dies.
Another variation involves multiple annuitants. A Joint-and-life annuity pays until the first annuitant dies; a joint-and-survivors Florida annuity pays until both annuitants die.So let’s say that a retired couple living in Florida were looking for a contract that would pay the annuitant, and his surviving spouse. Then they would probably go for a joint and survivors Florida annuity. An impaired-life annuity is potentially important for a holder whose life expectancy drops dramatically during the life of the Florida annuity contract; the terms allow for a commensurate increase in payout as compensation.
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