Business Definition for: periodic purchase deferred contract
periodic purchase deferred contract
annuity
contract for which fixed-amount payments, called premiums, are paid either monthly or quarterly and that does not begin paying out until a time elected by the holder (the annuitant). In some cases, premium payments may continue after payments from the annuity have begun. A periodic purchase deferred contract can be either fixed or variable.
See also
variable annuity
,
fixed annuity
Related Terms:
one whose periodic payments are dependent on some undetermined or uncertain outcome such as the value of a securities portfolio. Acontract between an investor and insurance company may take this form and subsequently the periodic payments would change as a function of the changes in applicable securities prices or rates of return. A variable annuity may also consist of payments that vary depending on changes in money market interest rates.
investment contract sold by an insurance company that guarantees fixed payments, either for life or for a specified period, to an annuitant. In fixed annuities, the insurer takes both the investment and the mortality risks. Afixed annuity contrasts with a variable annuity where payments depend on an uncertain outcome, such as prices in the securities markets.
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