contingent annuity
Quick Summary
A contingent annuity is a type of annuity where payments are dependent on a specific condition continuing. Unlike an annuity certain, which makes a fixed number of payments, a contingent annuity's payments rely on a status remaining in effect. A common example is a life annuity, where payments continue only as long as the recipient is alive.12
These annuities operate on the principle of shared risk. Individuals contribute to a fund, and payments are based on life expectancy. Some recipients may receive more in payments than they contributed, while others may receive less. This risk-sharing allows for potentially higher guaranteed payments than simple investments.12
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