Overview of Life Insurance Annuities

Life insurance annuities allow a buyer to pay a certain amount in payments with the option of a lump sum payout at the end of the term. There are different types of payment and distribution options available according to the life insurance company offering the annuity. This decision is made when choosing an annuity.

Life insurance annuities have two main phases to them. There is a payment phase, in which the person who will collect on the annuity making payments towards the annuity. There is also a distribution phase to an annuity. There are different choices as to how much the payments will be, and there are different choices in terms of how the distribution is paid out.  Each option should be thoroughly discussed before a decision has been made. 

In a life insurance annuity, a beneficiary receives the payout as payments or as one lump sum. The person who has purchased the annuity at the time the contract is signed can decide this. The beneficiary will receive the payout at the purchaser's time of death. This insures that the annuity will be received by the beneficiary and not lost. Many people find great value in life insurance annuities and include them in their financial arrangements. 

There are several different types of life annuities. These include guaranteed annuities, joint annuities, impaired life annuities, as well as fixed and variable annuities. Each of these life insurance annuities has different payout terms. A joint annuity offers a distribution to the secondary person on the annuity if the first person dies. This can be for married couples. An impaired life annuity can be distributed to those with certain conditions that reduce a person's life expectancy such as a terminal illness. Each of the different types of annuities have different terms when initiated.