In addition to deciding between fixed or variable income streams, the annuity buyer needs to decide how long annuity income payments will last and who will receive those payouts. The options include the following:
Life
The annuity payments are made for the entire duration of the annuity owner’s life, regardless of how long or short that might be.
Term Certain
With a term certain annuity, payments are made for a specific and pre-defined period of time such as 5, 10 or 20 years. The annuity owner and his or her beneficiaries receive the payments regardless of whether the annuity owner dies before the end of the term certain period.
Life with Term Certain
The life with term certain option makes payments for the greater of: a) the life of the annuity owner, or; b) the term certain or pre-determined period of time.
Life with Refund
The life with refund option provides a refund of the amount of principal the annuity owner paid into the annuity in the event that the owner dies before receiving payments that equal or exceed this full amount of principal. For example, let’s say that Bob put $100,000 into an annuity, and that Bob only received $50,000 in annuity payments by the time he passed away. With the life and refund option, Bob would receive the additional $50,000 as a refund.
Single
With a single payout, annuity payments are made and depend on the life of a single person.
Joint and Survivor
With a joint and survivor payout, annuity payments are made on the lives of two individuals (a husband and wife for example), and payments continue to be made to the survivor in the event of the death of one of the annuitants.
Pure Joint Life
A pure joint life option is also based upon two lives. However, with a pure joint life option payments stop when the first person dies.
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