# In 2000, Alan purchased a commercial single premium annuity. Under the terms of the policy, Alan...

In 2000, Alan purchased a commercial single premium annuity. Under the terms of the policy, Alan is to receive {eq}\$120,000 {/eq} annually for life. If Alan predeceases his wife, Katelyn, she is to receive {eq}\$60,000 {/eq} annually for life. Alan dies first at a time when the value of the survivorship feature is {eq}\$900,000 {/eq}. A) How much, if any, of the annuity is included in Alan's gross estate? Taxable estate? B) Would the answers to part A) change if the money Alan used to purchase the annuity was community property? Explain. ## Annuity Premium: The funds that contribute into an annuity are known as annuity premiums. Annuities are paid or received by annuitant on a regular basis and are commonly utilised in retirement accounts. Insurance also utilise annuities but are implied warranties. ## Answer and Explanation: 1 Become a Study.com member to unlock this answer! In the year 2000, A purchased an allowance of$120,000 per year. If he dies before, his wife will receive \$60,000 every year for the rest of her life....

What is Annuity? - Definition & Formula

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Chapter 2 / Lesson 7
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An annuity is a fixed amount of income paid at regular intervals, such as monthly or quarterly. Learn the definition and formula for annuity, review examples of annuities, and understand how to determine the value of annuities.