installment refund annuity investment & finance definition

A refund option offered to the beneficiaries of a person who buys an annuity that allows the beneficiaries to receive a minimum amount of money after the annuitant dies. An installment refund annuity makes installment payments that consist of the difference between the purchase price of the annuity and the total annual benefits received by the annuitant. An installment refund annuity provides some compensation for the annuitant’s beneficiaries to account for the fact that had the annuitant lived, he or she would have been entitled to more annuity payments.