- An employee may receive an annuity as part of a retirement package. These annuities are normally part of a pension scheme, but may also be the result of converting a 401(k) or an IRA to guaranteed income payments. Annuities may also be held outside of a retirement plan as a private policy. In all cases, the purpose is the same: retirement savings.
- When an annuity policyholder dies, his annuity may be given to a spouse in some situations. This is true if the annuity is a deferred annuity, which acts like a long-term savings. The annuity may also be given to a beneficiary if the it's an immediate annuity paying a guaranteed monthly income and offers beneficiary options. Not all immediate annuities offer this option, however.
- A financial institution may be the recipient of an annuity in certain instances. Premium financing is an arrangement where a borrower is given money by a bank to pay for an insurance policy. The loan is repaid to the bank. Part of the loan proceeds may be used to repay the bank using an annuity, while the remainder of the money is sent to the insurance company. This arrangement works when the individual has a high net worth and is advanced in age, and premiums on a policy would be more expensive than a loan.
- When an individual dies, he may use the combination of a trust and an annuity to distribute funds to various charities. This arrangement is normally done when an individual has accumulated significant wealth and can afford to distribute money to a charity organization. The details of the dollar amounts to be received and the payment schedule are determined beforehand in the trust documents and by the particular annuity owned by the trust.
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