What Is the Payout Phase?

The payout phase in an annuity is the phase when payments are made to the 澳洲幸运5官方开奖结果体彩网:annuitant. These usually distribute on a monthly basis and last for the lifetime of the annuitant. An annuity is a financial product that pays an investor or recipie𒐪nt a stream of payments at some p🎶oint in the future.

The investor deposits money into the annuity, which is called the 澳洲幸运5官方开奖结果体彩网:accumulation phase. When the investor begins receiving payments, which is typically in retirement, the annuity has entered the payout phase. The size and frequency of the payouts can vary, depending on the type of annuity the investor has purchased. The payout phase is also called the 澳洲幸运5官方开奖结果体彩网:annuitization phase.

Understanding the Payout Phase

The payout phase comes after the 澳洲幸运5官方开奖结果体彩网:accumulation phase when an🐼 annuitant builds assets for retirement through their annuity portfolios. Once withdrawn, the income received by a retired investor is taxable income as well as any of th🔯e earnings or investment from over the years. In other words, any payouts are taxed as ordinary income.

Most annuities have a minimum age at which an annuitant can begin the payout phase without incurring an early 澳洲幸运5官方开奖结果体彩网:withdrawal penalty. The investor can also in♏clude provisions to continue the payments until both the annuitant and their spouse are deceased. However, the annuitiz🌺ation process is irreversible once it has entered the payout phase, meaning the annuitant cannot continue to build assets and increase the value of their annuity portfolio.

When annuitants are ready to begin receiving payments from their annuities, they notify the insurance company of their decision to do so. At the beginning of the payout phase, the investor may receive a 澳洲幸运5官方开奖结果体彩网:lump-sum payment or may choose to receive the payout as a stream of payments at regular intervals. Actuaries use mathematical models and life expectancy tables to compute payment amounts, which will last for the life of the annuitant: the longer one waits, the larger one's p𒀰ayments will be.

Types of Payout Phases

If the investor chooses a stream of payments versus a one-time payout, they may choose to receive payments that are fixed or payments that vary based on the performance of various investment options such as a 澳洲幸运5官方开奖结果体彩网:mutual fund. The🦩 amount of each periodic payment will depend, in part, on the time period selected for receiving payments.

When the investor decides to annuitize the contract, a specific payment option, which usually cannot be changed in any way, is locked into the annuity. The value of the account can either be drawn in a lump sum or annuitized over the investor's lifetime.

There are several 澳洲幸运5官方开奖结果体彩网:annuity payout options available, including the following:

Life Annuity

A 澳洲幸运5官方开奖结果体彩网:life annuity option usually provides the largest periodic payments since the payments are spread out oveꦯr the lifꦿe of the recipient. The life annuity is helpful since it helps the retiree from outliving their savings, meaning they don't run out of money.

Life Annuity with Period Certain

Life annuity with period certain guarantees the payments over a certain period of time in addition to lifetime payments. Also, the beneficiary will receive payments for the remainder of a certain period if the annuitant dies. This option helps in case the annuitant dies before the guaranteed period hasꦗ passed. The annuity payments w🃏ould continue for the guaranteed period, such as 10 years, with the beneficiaries as the recipients.

Joint Life with the Last Survivor

Joint life with the last survivor covers two or more people, whic♛h is usually a husband and wife. The annuity continues payments to the survivor after the d๊eath of the first person.

Life Contingency

Life contingency is an annuity with an attached 澳洲幸运5官方开奖结果体彩网:death benefit, which is a payout similar to a li🔯fe insurance po🐎licy.