life annuity: meaning, definition, pronunciation and examples
LowFormal / Technical
Quick answer
What does “life annuity” mean?
A financial product that provides a guaranteed series of regular payments for the rest of a person's life in exchange for a lump-sum premium.
Audio
Pronunciation
Definition
Meaning and Definition
A financial product that provides a guaranteed series of regular payments for the rest of a person's life in exchange for a lump-sum premium.
A type of insurance contract or pension arrangement where an individual receives periodic payments until death, serving as a hedge against outliving one's savings. It can be structured as fixed, variable, or indexed.
Dialectal Variation
British vs American Usage
Differences
Term is identical in both variants. The legal/financial frameworks (e.g., tax treatment) differ, but the lexical item does not.
Connotations
Neutral technical term in both. Slightly more associated with pension planning in the UK context.
Frequency
Equally low-frequency in specialized financial/retirement planning discourse in both regions.
Grammar
How to Use “life annuity” in a Sentence
[Subject] purchased a life annuity.A life annuity provides [recipient] with [payment].The [adjective] life annuity guarantees [benefit].Vocabulary
Collocations
Examples
Examples of “life annuity” in a Sentence
verb
British English
- He decided to **annuitise** his pension pot, securing a life annuity.
- The scheme allows members to **life-annuitise** their savings.
American English
- She plans to **annuitize** her 401(k) to get a life annuity.
- They chose to **convert** their assets into a life annuity.
adjective
British English
- The **life-annuity** market has seen new regulatory changes.
- He received a **life-annuitised** income.
American English
- The **life annuity** product features were explained. (attributive use of noun)
- They opted for a **life-annuity** solution.
Usage
Meaning in Context
Business
The company's pension scheme offers the option to convert your fund into a life annuity upon retirement.
Academic
The study modelled the longevity risk inherent in pricing a life annuity portfolio.
Everyday
My grandparents use their life annuity to cover their basic living expenses.
Technical
The actuarial present value of a whole life annuity-due is calculated using the survival function and discount factor.
Vocabulary
Synonyms of “life annuity”
Strong
Neutral
Weak
Vocabulary
Antonyms of “life annuity”
Watch out
Common Mistakes When Using “life annuity”
- Mispronouncing 'annuity' as /ˈæn.ju.ɪ.ti/ or /əˈnaɪ.ti/.
- Using 'life annuity' to refer to a one-time life insurance payout.
- Confusing it with a 'life estate' in property law.
FAQ
Frequently Asked Questions
Typically, payments stop upon the annuitant's death, unless it is a 'joint-and-survivor' or 'guaranteed period' annuity, which would continue payments to a beneficiary or for a set time.
Not exactly. A pension is a general term for retirement income. A life annuity is one specific financial product often used to provide pension income by converting a savings pot into a lifelong stream of payments.
You cannot outlive the payments, which is the core benefit. However, if you die early, you may not receive the full value of your initial premium (depending on the contract type), which represents a 'loss' in purely financial, non-actuarial terms.
A fixed life annuity provides regular payments of a predetermined amount. A variable life annuity's payments fluctuate based on the performance of underlying investment funds chosen by the annuitant.
A financial product that provides a guaranteed series of regular payments for the rest of a person's life in exchange for a lump-sum premium.
Life annuity is usually formal / technical in register.
Life annuity: in British English it is pronounced /ˈlaɪf əˈnjuː.ə.ti/, and in American English it is pronounced /ˈlaɪf əˈnuː.ə.t̬i/. Tap the audio buttons above to hear it.
Learning
Memory Aids
Mnemonic
Think: 'ANNUal payments for LIFE' = LIFE ANNUity. It's an annual income for life.
Conceptual Metaphor
LONGEVITY AS A FINANCIAL PRODUCT (managing the risk of a long life); MONEY AS A LIFELINE (providing continuous support).
Practice
Quiz
What is the primary purpose of a life annuity?