Which Settlement Option Pays a Stated Amount To An Annuitant

Shawn Plummer

CEO, The Annuity Expert

Most people don’t know that there are a number of settlement options for annuitants. One such option is the “stated amount” settlement option, which pays an annuitant a stated amount at the end of each year instead of receiving monthly payments. The purpose behind this type of settlement is to provide security and income stability.

The Refund Annuity

A refund annuity guarantees a certain minimum amount will be paid, regardless of when the annuitant dies. There are two types of refund annuity: 

Cash Refund Annuity

The insurer promises that if the sum of the periodic income payments received by the annuitant does not meet or exceed the amount of the cash value annuitized at his or her death, the difference will be paid in a lump sum to his or her beneficiary.

Installment Refund Annuity

In an installment refund annuity, the insurance company promises that if the sum of periodic income payments received by the annuity does not equal or exceed the amount paid for it, income payments will be made to a beneficiary until the remainder is repaid.

The difference between the two is how the refund is carried out. An installment refund annuity continues the periodic payments to the beneficiary rather than providing a lump-sum payment (Cash Refund Annuity).  

An installment annuity promises that, if the annuitant dies before receiving payments equal to the correct value, the payments will be continued to a beneficiary until an amount equal to the contract value has been paid.

Period Certain Annuity

A period certain annuity is a settlement option that guarantees payments for a specific number of years, typically 5 to 20 years. If the annuitant dies before the policy is over, the payments can be passed to a beneficiary.

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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