What is Spousal Continuation?

Shawn Plummer

CEO, The Annuity Expert

A spousal continuation is a death benefit option for the surviving spouse that allows the beneficiary to assume ownership of the annuity contract preserving tax-deferred growth as long as the contract remains in force.

This provision is critical for widows inheriting qualified annuities (IRA Annuity), and “softens” the tax blow at the time of death.

If this option is selected, the spouse can surrender the annuity contract in the future, take a lump sum of funds, or take a guaranteed income stream.

The Income Rider

If the owner’s spouse is the sole primary beneficiary and elects to continue the policy, the benefits of the income rider (Guaranteed Lifetime Withdrawal Benefit) will also continue, providing the spouse becomes the sole annuitant and sole owner of the policy.

If the spousal beneficiary assumes the policy before any GLWB withdrawals have been taken, the benefit continues in the accumulation period.

Spousal continuation does not restart the withdrawal charge schedule.

Single Owner with a spouse who dies prior to starting income payments:

  • If an income rider is chosen, the owner dies, and the spouse is not a joint owner, the surviving spouse can continue the contract, and the total income base will continue to grow during the income base growth period.
  • The traditional death benefit for beneficiaries is also an option.

Single Owner who has chosen to receive Single Lifetime withdrawal payments:

  • The surviving spouse can choose to continue the contract, including receiving lifetime income payments.
  • The death benefit or Guaranteed Lifetime Withdrawal Benefit value will become the new income base at the time of death. Varies by product.
  • The income withdrawal amount will be recalculated based upon the surviving spouse’s age at the calculation time.

Single Owner who has chosen to receive Joint Lifetime withdrawal payments:

  • The surviving spouse can choose to continue the contract, including receiving lifetime income payments.
  • The income base and the income withdrawal amount will remain the same.

Joint Owners that receive Joint Lifetime withdrawal payments:

  • The surviving spouse can choose to continue the contract in force, including receiving lifetime income payments.
  • The income base and the income withdrawal amount will remain the same.
  • This is only available to a joint owner who is the spouse

Do trust-owned annuities qualify for spousal continuation?

Since the annuity contract owner is a trust and not an individual, spousal continuation would not be available.

Also, keep in mind that the general rule is that trust-owned annuities should name the trust as the beneficiary of the annuity and not the annuitant’s spouse.

Annuity Contract Setup:

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Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

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

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