reversionary annuity: meaning, definition, pronunciation and examples
LowFormal, Technical
Quick answer
What does “reversionary annuity” mean?
A type of annuity that begins paying out to a beneficiary (often a surviving spouse) after the death of the original policyholder or annuitant.
Audio
Pronunciation
Definition
Meaning and Definition
A type of annuity that begins paying out to a beneficiary (often a surviving spouse) after the death of the original policyholder or annuitant.
In legal and financial contexts, it refers to a deferred annuity contract where regular payments commence upon the occurrence of a specified event, typically the death of a primary annuitant, ensuring continued financial support for a dependent. It is a contingent interest, vesting only upon that event.
Dialectal Variation
British vs American Usage
Differences
Terminology is identical and standard in both UK and US finance/legal sectors. The underlying contract law and regulatory frameworks differ.
Connotations
Technical financial/legal instrument; neutral connotation of prudent estate or retirement planning.
Frequency
Equally low-frequency in specialist domains in both varieties. More common in actuarial science, pension law, and estate planning documents.
Grammar
How to Use “reversionary annuity” in a Sentence
[policyholder] secured a reversionary annuity for [beneficiary]The [reversionary annuity] will revert to [beneficiary] upon [event].Vocabulary
Collocations
Examples
Examples of “reversionary annuity” in a Sentence
verb
British English
- The pension scheme allows members to reversionarise a portion of their fund, creating a reversionary annuity for their partner.
American English
- The contract provides an option to convert the lump sum into a reversionary annuity for the surviving spouse.
adverb
British English
- The benefit was structured reversionarily, ensuring posthumous support.
American English
- The payout is designed reversionarily, commencing only upon the holder's death.
adjective
British English
- The reversionary annuity benefits were clearly outlined in the trust document.
American English
- They discussed the tax implications of the reversionary annuity provision.
Usage
Meaning in Context
Business
Discussed in financial planning meetings as a tool for ensuring a spouse's income after the pensioner's death.
Academic
Analyzed in actuarial studies for pricing mortality risks and contingent liabilities.
Everyday
Extremely rare. Might be mentioned in detailed discussions with financial advisors or in estate planning.
Technical
Precisely defined in pension scheme trust deeds, insurance contracts, and tax legislation.
Vocabulary
Synonyms of “reversionary annuity”
Strong
Neutral
Weak
Vocabulary
Antonyms of “reversionary annuity”
Watch out
Common Mistakes When Using “reversionary annuity”
- Using 'reversionary' incorrectly as a synonym for 'reversible'.
- Confusing it with a 'joint-life annuity', which pays while either annuitant is alive, whereas a reversionary annuity starts after one dies.
- Omitting the contingent nature: assuming payments are guaranteed to start immediately.
FAQ
Frequently Asked Questions
No. Life insurance pays a lump sum upon death. A reversionary annuity provides a stream of regular income payments to a beneficiary that start after the annuitant's death.
The original annuitant (or policyholder) owns the contract. The beneficiary has a contingent interest that only vests upon the annuitant's death.
It depends on the specific contract terms. Some are irrevocable, while others may allow the annuitant to change the beneficiary before the triggering event.
Tax treatment varies by jurisdiction. Typically, the payments received by the beneficiary are treated as taxable income, similar to other annuity payments, but specific rules depend on local tax law and the source of funds used to purchase the annuity.
A type of annuity that begins paying out to a beneficiary (often a surviving spouse) after the death of the original policyholder or annuitant.
Reversionary annuity is usually formal, technical in register.
Reversionary annuity: in British English it is pronounced /rɪˈvɜː.ʃən.ər.i əˈnjuː.ɪ.ti/, and in American English it is pronounced /rɪˈvɝː.ʒə.ner.i əˈnuː.ə.t̬i/. Tap the audio buttons above to hear it.
Phrases
Idioms & Phrases
- “None. It is a technical term without idiomatic usage.”
Learning
Memory Aids
Mnemonic
Think of REVERSION (turning back) + ARY (related to) + ANNUITY (yearly payments). It's the yearly payments that 'turn back' to go to someone else after the first person dies.
Conceptual Metaphor
FINANCIAL SAFETY NET IS A CONTINGENT INHERITANCE (The future income is held in reserve, like an item held in trust until a specific future event triggers its release).
Practice
Quiz
What is the defining characteristic of a reversionary annuity?