A commercial annuity refers to a contract between an individual and a company that sells financial products. The contract states that the company will be liable to make regular payments to the annuitants for a certain time period. Some annuities also give benefits to beneficiaries after death.
Time Period
After purchasing a commercial annuity, you may be able to start receiving the payments immediately or you may choose to receive them later after a few years.
Annuity Rates
Commercial annuity plans usually establish the rates while assuming that all the assets will be consumed by the end of the annuity-holder's life.
Beneficiaries
In some cases, a commercial annuity provides assistance to the beneficiaries of the annuity holder. This means that while purchasing a commercial annuity, the annuity holder is required to make payments for himself as well as the after-death beneficiaries.
The Difference Between a Commercial Annuity and a Gift Annuity
Unlike a charitable gift annuity that provides low rates, a commercial annuity typically pays much higher rates. However, a gift annuity provides more tax benefits as compared to a commercial annuity.
Where to Find Them
Commercial annuities are sold by banks and insurance companies. You may also find some annuity stores online.