Just SA’s weekly jargon buster aims to give simple, plain English explanations of typical words and phrases used in the financial industry, in particular words relating to guaranteed life annuities and living annuities.
This week, we look at words that start with the first letter of the alphabet: A
|An actuary is a business professional who deals with the financial impact of risk and uncertainty. An actuary assesses and manages financial risks, mainly related to pensions and insurance. Using mathematics and statistics, an actuary will analyse data to predict future events like accidents or illnesses, helping to design products and policies, set rates or premiums. Actuaries must have a holistic understanding of value creation - for financial advisers and brokers, policyholders and the company.
|The person who receives the income from an annuity. You are an annuitant if you have, for example, a living or life annuity paying you an income. A living or life annuity will have been considered by an actuary where the rate of income you receive should be based on your unique circumstances. For example, women may live longer than men, with at least 10% reaching 100 years old. An annuitant’s longevity is crucial to factor into annuity pricing.
|An annuity is a product that pays a regular income in exchange for a lump sum. An annuitant becomes the owner of an annuity once the lump sum is used to purchase a living, life or hybrid annuity, and depending on this choice, an income could be paid for life. Alternatively, an income will be paid from a living annuity based on the market performance and amount of monthly income chosen.
Source: Just Retirement SA, [email protected].