Sometimes referred to as a Straight Life Annuity
Lifetime Annuity is a term used to describe a payout option or provision within an Immediate Annuity contract. An individual can purchase an annuity and when the annuity distribution period begins or when the annuitization begins, the annuity will then pay the money back to the individual over a period of time. When the annuity contract contains a lifetime payment provision, the annuity continues to give an income to the annuitant until he or she dies. Individuals can decide on how much is paid to them each time or how frequently payments are made, typically they cannot choose both. Once payment options are chosen, however, they cannot be changed.
Lifetime Annuity Payout Options
Lifetime annuities can also come with riders that would provide continued payment to others upon death of the annuitant. These riders typically provide annuity payments to a surviving spouse of the annuitant and are called Joint & Survivor annuities. The following provisions and riders may be attached or added to a lifetime annuity:
- Joint & Survivor: Level payments are made to both as long as either annuitant is alive.
- Joint & Survivor reducing on First or Either death: Level payments are made to the annuitant and joint annuitant until one or the other dies.
- Period Certain provisions to Joint & Survivor Lifetime Annuity: Provides both annuitants with level payments over the course of either lifetime. However, should either annuitant die before the certain period has passed, the remaining annuitant continues to receive the full level payment from the annuity until after the certain period has ended. If both die before the certain period is over than beneficiaries are paid until the end of the certain period.
- Joint & Survivor reducing only on death of Primary Annuitant: Level payments are made to both the annuitant and joint annuitant.
- Cash refunds and Installment refunds: Can be added to Joint & Survivor lifetime annuity plans. Variations can be made between the death of one or both annuitants and the payments to survivors or beneficiaries based on the amount left in the annuity. Depending on the type of refund provision, sums may be paid out depending on the death or deaths of either or both annuitants.