What is a Non-refund Annuity? A Comprehensive Legal Overview
Definition & Meaning
A non-refund annuity is a type of financial product that guarantees regular payments to the annuitant for their lifetime. However, unlike refund annuities, it does not provide any payments to beneficiaries after the annuitant's death. This means that once the annuitant passes away, the payments cease, and there is no remaining value to be transferred to heirs. Non-refund annuities are often referred to as straight life annuities or pure annuities.
Legal Use & context
Non-refund annuities are primarily used in estate planning and retirement planning. They are relevant in the fields of financial law and elder law. Legal professionals may assist clients in understanding the implications of choosing a non-refund annuity versus other types of annuities. Users can manage their own annuity contracts and related documents by utilizing legal forms available through services like US Legal Forms.
Real-world examples
Here are a couple of examples of abatement:
Example 1: John, a 65-year-old retiree, purchases a non-refund annuity. He receives monthly payments for as long as he lives. If John passes away after five years, his payments stop, and nothing is returned to his heirs.
Example 2: (hypothetical example) Sarah buys a non-refund annuity at age 70. She enjoys guaranteed income until her death. If she dies after ten years, her estate receives no further payments.