GROUP ANNUITY Meaning and
Definition
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A group annuity refers to a type of retirement benefit plan in which a company purchases an annuity contract from an insurance company for the benefit of its employees or members of an organization. It is a financial arrangement that allows a group of individuals to contribute money into a pooled investment, which is then managed by the insurance company.
In a group annuity scheme, the employer or organization acts as the policyholder, while the employees or members are the annuitants. Contributions are typically deducted from the individual's salary or membership fees and invested on a tax-deferred basis.
The insurance company responsible for managing the group annuity pool invests the contributed funds to generate returns over time. These funds are then used to pay out annuities to the individuals upon retirement, providing them with a steady stream of income during their post-employment years.
Group annuities offer several advantages, such as economies of scale in terms of investment management fees, as well as the ability to spread longevity risk across a larger group. Additionally, they may provide benefits like survivorship benefits, cost-of-living adjustments, and portability options.
It is important to note that group annuities are distinct from individual annuities, which are purchased directly by an individual for their own retirement planning. Group annuities are typically offered by employers, associations, or other organizations as a part of their employee benefits or membership perks.
Common Misspellings for GROUP ANNUITY
- froup annuity
- vroup annuity
- broup annuity
- hroup annuity
- yroup annuity
- troup annuity
- geoup annuity
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- griup annuity
- grkup annuity
- grlup annuity
- grpup annuity
- gr0up annuity
- gr9up annuity
- groyp annuity
- grohp annuity
Etymology of GROUP ANNUITY
The word "group annuity" has its roots in both Latin and Old English.
The term "group" comes from the Latin word "gruppus", meaning a cluster or collection. It was borrowed into Old English as "grūpa", which referred to a band or company of people.
The word "annuity" is derived from the Latin term "annuus", meaning annual. In Latin, "annus" referred to a year. Over time, it evolved into the Old English word "annuite", which denoted an annual payment or stipend.
When combined, "group annuity" refers to a financial product that provides a stream of income or payments to a group of individuals, typically from an insurance company or pension plan.
