Defined terms for the annuity market and lifetime income landscape.
Annuity payments are the periodic income amounts an insurer pays to the contract owner under an annuitized contract, scheduled at a fixed frequency — most commonly monthly — and continuing under terms specified in the contract, typically for the lifetime of the contract owner.
Annuity persistency is the rate at which annuity contracts remain in force over time without being surrendered, lapsed, annuitized into income, or otherwise terminated, typically measured as a percentage of contracts (or premium dollars) remaining in force at successive contract anniversaries.
The annuity puzzle is the observation that voluntary purchase of lifetime income annuities by retirees is much lower than standard economic theory predicts, given that annuitization should be broadly rational for individuals without strong bequest motives or other unusual circumstances.
Assignment of an annuity contract is the transfer of some or all of the contract owner's rights to another party, either as a collateral pledge or as an outright transfer of ownership, with tax and regulatory consequences that vary by contract type and by the terms of the assignment.
A bailout provision is a contractual feature of certain deferred annuities — most commonly fixed indexed and fixed annuities — that allows the contract owner to surrender without a surrender charge or market value adjustment if a defined crediting parameter falls below a specified threshold.
