What Is A Group Annuity

If the calculation comes out above a certain point you get paid on your annuity.

What is a group annuity. A group annuity however is a large annuity contract to accommodate a business. Basically the company issuing the annuity creates some rules and guidelines to calculate an indexs interest. They are the issuer usually an insurance company the owner of the annuity the annuitant and the beneficiary.

Group annuities are insurance contracts that provide retirement savings plan sponsors and their employees the benefits of limited start-up costs and easy administrative procedures. An annuity contract is a contractual obligation between as many as four parties. Because this is an annuity it must go through an insurance company.

Usually the term annuity relates to a contract between you and a life insurance company but a charity or a trust can take the place of the insurance company. What Is a Group Annuity Contract. In its most general sense an annuity is an agreement for one person or organization to pay another a stream or series of payments.

In the insurance industry the annuitant is referred to as the measuring life. State Farm Insurance definitely an insurance company that sells annuities defines an annuity as a type of policy issued by an insurance company designed to accept and grow funds and upon annuitization create a stream of income or payments. A group annuity is a shared retirement or pension plan for which payments are made by one entity such as an employer on behalf of a group.

Employees own units instead of shares and have to observe lock-up periods during which they cant move their money out. Most group annuities have multiple options for payout. They are typically issued by life insurance companies.

Often marketed as a financial product an annuity is basically a contract between you and an insurance company designed to provide an income that is guaranteed for the rest of your life. If not then you may not earn interest but your principal stays safe. As the annuity owner you can choose different timeframes for crediting method.