Commutation


Commutation
The right that a beneficiary has to exchange one type of income for another. Commutation is offered to beneficiaries of annuities and life insurance policies, so that they might receive a lump-sum payment instead of a series of future payments. When this happens, the net present value of all remaining payments is computed into a single payment that is given to the beneficiary.

The right of commutation can provide a larger sum of money to a beneficiary who needs it now. This can be a tremendous boon for those who need cash to pay for medical or other bills that cannot wait. However, this right must be accorded to the beneficiary in the policy.


Investment dictionary. . 2012.

Synonyms:
/ (of a greater punishment by a less)


Look at other dictionaries:

  • commutation — [ kɔmytasjɔ̃ ] n. f. • déb. XIIe; lat. commutatio « changement » 1 ♦ Didact. Substitution, remplacement. Commutation et permutation. Spécialt Substitution d un élément par un autre, dégageant des distinctions pertinentes (notamment en… …   Encyclopédie Universelle

  • Commutation — Com mu*ta tion, n. [L. commutatio: cf. F. commutation.] 1. A passing from one state to another; change; alteration; mutation. [R.] [1913 Webster] So great is the commutation that the soul then hated only that which now only it loves. South. [1913 …   The Collaborative International Dictionary of English

  • commutation — index clemency, compensation, compromise, exchange, immunity, mutuality, replacement, subrogation Burton …   Law dictionary

  • commutation — com‧mu‧ta‧tion [ˌkɒmjˈteɪʆn ǁ ˌkɑː ] noun [countable] INSURANCE a single large payment instead of a series of future payments: • The assets of the insurer will be used to make a single, final payment, called a commutation, to policyholders. * * …   Financial and business terms

  • commutation — COMMUTATION. s. f. Changement. Il n est en usage que dans cette phrase, qui se dit en matière criminelle, Commutation de peine …   Dictionnaire de l'Académie Française 1798

  • commutation — mid 15c., from O.Fr. commutacion change, transformation, exchange, barter (13c., Mod.Fr. commutation), from L. commutationem (nom. commutatio) a change, alteration, noun of action from commutare to change, alter entirely (see COMMUTE (Cf.… …   Etymology dictionary

  • commutation — Commutation. substant. fem. Changement. Il n est en usage qu en cette phrase. Commutation de peine …   Dictionnaire de l'Académie française

  • commutation — [käm΄yə tā′shən] n. [ME & OFr commutacion < L commutatio, a changing < commutatus, pp. of commutare,COMMUTE] 1. an exchange; substitution 2. a) the substitution of one kind of payment for another b) the payment made ☆ 3. the act of… …   English World dictionary

  • Commutation — (v. lat. Commutatio), 1) Veränderung, Vertauschung; 2) (Rhet.), so v. w. Antimetabole; 3) (Commutationswinkel, Astr.), der Winkel, welchen die Linie von der Erde aus zur Sonne mit einer andern von der Sonne zu einem Planeten macht; er ist immer… …   Pierer's Universal-Lexikon

  • commutation — et changement, Commutatio …   Thresor de la langue françoyse

  • commutation — ► NOUN 1) the commuting of a judicial sentence. 2) the commutating of an electric current …   English terms dictionary