What does "Annuitized Y/N" refer to regarding an annuity?

[chris3]

Someone asked me to find this out for a particular annuity. Y I might guess refers to the year the annuity was bought, but perhaps I'm wrong? N might refer to the number of payments the annuity will make? Or the number that have been made so far? Once I know what the phrase annuitized y/n means, where do I get the y and n?

 

[yuliia]

@chris3 Is it ‘yes slash no’?

 

[chris3]

@yuliia I think it might be now that you mention it. I hadn't thought of that. Thanks. Do you have any knowledge how would one know whether yes or no, an annuity has been annuitized?

 

[yuliia]

@chris3 This might help:

https://www.investopedia.com/terms/a/annuitization.asp

 

[peacefulwarrior71]

@chris3 I think it means ‘have these particular pensionable/Roth IRA/etc assets been used to purchase an annuity [Y], or are they currently still held in a product / account / wrapper with significant exposure to market risk-facing assets [N]

Annuities are, essentially, a right to receive payment from time to time in the form of an income, underwritten and guaranteed by a provider in exchange for a lump sum from the customer. Turning a fixed amount into a series of regular disbursements. Usually, though not always, an annuity will pay the holder until they die - for the remainder of their life. It transfers depletion and longevity risk (industry speak for the capital running out prematurely) to the provider, for which the provider will work in a margin to compensate for its assumption of liability and investment management service.

Once an annuity is written, it’s rare for its terms to change, and the customer usually relinquishes their right to access / use the capital as a lump sum- their interest is irreversibly ‘converted’ into the right to receive an income.

This means that whether an amount of capital in a person’s possession has or hasn’t been annuitised is a super important aspect of their financial position. I share the suggestion others have made that this is what the y/n question relates ton