|The annuity policy owner. The annuitant is the defendant’s casualty insurer that purchases the annuity.
|A contract under which the policy issuer (a life insurance company) agrees to pay the policy owner (the annuitant casualty insurer) certain amounts at set times in accordance with a schedule of payments. The annuitant/owner irrevocably designates the plaintiff (the measuring life) as the party to receive payments under the policy.
|The term beneficiary is used in two senses. Under the annuity contact the annuitant owner of the contract is the casualty insurer. The CCRA interpretation bulletin states, “the casualty insurer is the owner of, and annuitant (beneficiary) under, the annuity contract…”The term beneficiary is also used where a plaintiff dies before the end of a guarantee period. The beneficiary is entitled to receive the annuity payments until the end of the guarantee period. In practice, casualty insurers do not allow the naming of a beneficiary in the annuity contract; rather, the plaintiff’s estate receives the continuing benefits, and the plaintiff leaves a will to designate a beneficiary.
|Payments can be guaranteed for a specific period of time. If the plaintiff dies before the end of that time, the annuity can be paid to the estate until the guarantee period expires. If the plaintiff lives longer than the guarantee period, the payments will continue to the end of the plaintiff’s life (assuming the policy is life contingent).
|The amount by which the periodic payments increase annually to account for the effects of inflation.
|The issuer of a structured annuity in Canada is a life insurance company.
|The person on whose life the annuity policy is based. It may be one or more than one person (e.g., a spouse).
|Medical Age Rate-Up
|The cost of an annuity is directly related to the life expectancy of the plaintiff. If the plaintiff is not expected to have a “normal” life span the cost of the annuity will be correspondingly lower. In order to set the cost of the annuity, the life insurance company examines the plaintiff’s medical records to determine whether a medical age rate-up is appropriate. Thus a 35-year-old plaintiff may be rated as a 50 year old for the purposes of establishing the cost of the annuity.
|The defendant’s casualty insurer is the owner and annuitant under the contract. In other words, legal title vests with the casualty insurance company that pays the single premium to set up the annuity.
|Where the plaintiff dies before the end of the guarantee period, the rest of the payments flow back to the owner/casualty company.
|The policy can be split between more than one life insurance companies.