What Are Joint Life Annuities?

Shawn Plummer

CEO, The Annuity Expert

Every day, thousands of individuals seek ways to safeguard their financial future and that of their loved ones. Among the vast array of options, joint life annuities emerge as a promising choice for many. Let’s break down this concept and its benefits and see if it fits you.

What is a Joint Life Annuity?

A joint life annuity is a financial contract between an individual (or couple) and an insurance company. Simply put, in exchange for a lump sum or series of payments, the insurance company promises to make regular payouts to the annuitants for the rest of their lives.

Example: John and Mary, a retired couple, want to ensure they both have a steady income, even if one passes away. They invest in a joint life annuity, guaranteeing payouts for as long as either is alive.

Joint Life Annuities

How Do Joint Life Annuities Work?

You and your partner will start receiving payments upon purchasing a joint-life annuity. These payments continue until the last surviving partner passes away. The payment amount and frequency depend on the annuity terms and your invested amount.

Example: Jake and Emily bought an annuity that pays them $2,000 monthly. Emily passed away after ten years, but Jake continued to receive the $2,000 until his passing eight years later.

What Is A Joint Life Annuity

Why Buy a Joint Life Annuity?

The primary advantage of a joint life annuity is security. Knowing there’s a guaranteed income source, irrespective of market fluctuations, can provide peace of mind. Other benefits include:

  • Income Continuity: Payments continue as long as one partner is alive.
  • Tax benefits: Annuities can offer tax-deferred growth.
  • Flexible Payment Options: Choose between lump sum investments or periodic payments.

Example: Karen, a financial planner, advises her older clients to consider joint life annuities, especially if they fear outliving their savings. It’s a secure way to ensure financial stability.

Related Reading: What is The Life Annuity?

How Does A Joint Life Annuity Work

Who is a Joint Life Annuity Best Suited For?

A joint life annuity isn’t a one-size-fits-all product. It’s ideal for:

  • Couples looking for guaranteed income during retirement.
  • Those concerned about outliving their savings.
  • Couples with significant age differences.

Example: Neil and Laura, with a 15-year age gap, opted for a joint-life annuity. This ensures that the younger Laura has a financial cushion in the event she outlives Neil by many years.

Why Buy A Joint Life Annuity

When Should I Buy a Joint Life Annuity?

Timing is everything. Consider a joint-life annuity:

  • When you’re nearing retirement and assessing stable income options.
  • If you’ve received a large sum, like an inheritance, and want to ensure lifelong income.
  • When interest rates are favorable.

Example: After selling their family business, Carlos and Anita, both in their late 50s, decided to invest in a joint-life annuity to guarantee a comfortable and stable retirement.

Next Steps

A joint life annuity is a powerful financial tool, ensuring that you or your loved one will never be without income. As with any financial decision, it’s essential to consult a professional to ensure it aligns with your overall financial plan. Embracing such strategies can make the golden years truly golden, with peace of mind at the forefront.

When Should I Buy A Joint Life Annuity

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Frequently Asked Questions

What happens when a joint annuitant dies?

When a joint annuitant dies, the surviving annuitant typically continues to receive payments, often at a reduced rate, depending on the terms of the annuity contract. Review specific policies for exact details.

What is the disadvantage of joint life annuities?

A disadvantage of joint life annuities is that when the first annuitant dies, the survivor often receives a reduced payment, potentially making it harder for the surviving individual to meet their financial needs. The choice of beneficiary affects the payout rate and duration.

Frequently Asked Questions

Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed insurance agent and annuity broker with over a decade of first-hand experience. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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