Straight Life Annuity: Everything You Need to Know

Shawn Plummer

CEO, The Annuity Expert

When it comes to retirement planning, there are a lot of different options to choose from. One option that you may have heard of is the straight life annuity. But what is a straight life annuity, and how does it work? In this guide, we will discuss the basics of the straight life annuity and help you decide if this is the right retirement plan for you!

What is a Straight Life Annuity?

An annuity is a contract between an insurance company and an individual. The individual agrees to make periodic payments to the insurance company in exchange for a series of payments from the company, usually starting immediately and continuing for the rest of that person’s life. This type of annuity is called a “straight life annuity.”

A straight life annuity is a type of annuity in which the annuitant receives payments for as long as they live. The straight life annuity does not have an end date or time and usually pays out monthly, quarterly, semi-annually, or annually. Annuities are one way to make your money work for you and provide a reliable income stream in retirement.

How a Straight Life Annuity Works

When you buy an annuity, you can choose a beneficiary who will get money from the payments at your death. But when you buy an annuity with a straight life payout, it doesn’t have this as a benefit. So instead of providing a death benefit, it has higher guaranteed payments while the annuitant is alive.

To buy a life annuity policy, you can contribute to it as you go or with one lump-sum payment. The payments, once annuitized, will be the same either way.

An Individual Who Purchases A Life Annuity Is Given Protection Against?

In a life annuity, the payout is guaranteed for life and is given protection against outliving an income during the individual’s lifetime.

Joint And Survivor Straight Life Annuity

A joint and survivor annuity is a straight life annuity that continues to make payments until both annuitants named (usually spouses) are dead.

Joint and Survivor Annuities

Research joint life annuities then request a quote.

Straight Life Immediate Annuity

A straight life immediate annuity is a single-premium immediate annuity (SPIA) immediately annuitized on a straight life payout. Annuitization is mandatory.

Pros And Cons

  • One of the main benefits of the straight life annuity is that it provides a guaranteed income for life. This can be a great option for people who are worried about running out of money in retirement.
  • Another benefit of the straight life annuity is that it can help you keep your taxes low. With this type of annuity, the payments you receive are usually taxed at a lower rate than other types of income.
  • One downside of the straight life annuity is that you will not have access to your money if you need it for an emergency. Once you start receiving payments from the account, you cannot make any withdrawals.

Straight Life Fixed Annuity

A straight life fixed annuity is a deferred fixed annuity or multi-year guaranteed annuity (MYGA) that is annuitized on a straight life payout in the future. Annuitization is typically optional.

Straight Life Fixed Index Annuity

A straight life fixed index annuity is a deferred fixed index annuity that is annuitized on a straight life payout in the future. Annuitization is typically optional.

Straight Life Variable Annuity

A straight life variable annuity is a deferred variable annuity that is annuitized on a straight life payout in the future. Annuitization is typically optional.

Alternatives to Straight Life Annuities

A popular alternative to a straight life annuity is the Guaranteed Lifetime Withdrawal Benefit (GLWB). This allows the annuitant to receive for the rest of their life, like a straight life policy, with more liquidity, interest-earning potential, and a death benefit for beneficiaries.

Guaranteed Lifetime Withdrawal Benefits

Research fixed and fixed index annuities with income riders to provide you an income for the rest of your life.

Conclusion

If you are looking for an annuity that will provide payments as long as you live, a straight life annuity may be the right option for you. Request a quote below to find out how much this type of annuity would pay out each month, and see if it fits into your retirement plan. Remember, when you buy an annuity with a straight life payout, there is no benefit if both annuitants die prematurely. Make sure you understand all the details before making a decision.

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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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