Does a Single Life Annuity Have a Beneficiary?

An annuity is a financial product designed to provide a steady stream of income, typically during retirement. Individuals pay premiums into the annuity, either as a lump sum or through a series of payments. During the distribution phase, the annuity company makes regular payments back to the individual, known as the annuitant. This arrangement helps manage post-retirement expenses.

What a Single Life Annuity Is

A single life annuity, also known as a straight life or life-only annuity, is a contract providing guaranteed income payments for the life of one individual, the annuitant. This annuity type maximizes regular income for that person. Payments are calculated based solely on the annuitant’s life expectancy. Upon the annuitant’s death, these payments typically cease.

Beneficiaries and Single Life Annuities

A traditional single life annuity generally does not include a beneficiary provision for continued income after the annuitant’s death. Its primary design is to provide the highest possible periodic payments to the annuitant for their lifetime. Once the annuitant passes away, income payments stop, and there is usually no remaining principal or value to be passed on to heirs. The value essentially reverts to the insurer.

While rare, some single life annuities might offer a return-of-premium feature. This ensures that if the annuitant dies before receiving payments equal to their initial premium, the difference may be paid to a designated beneficiary. This payout only covers the unreturned premium amount, not a continuation of the income stream itself.

Other Annuity Types for Beneficiaries

For those prioritizing financial support for others after their passing, several alternative annuity types offer beneficiary designations or continued payments. A joint and survivor annuity, for instance, provides income for two people, typically a married couple, continuing payments as long as either annuitant is alive. While initial payments might be lower than a single life annuity, this option ensures a surviving individual receives income, often at a reduced percentage like 50% or 75%.

Another option is a period certain annuity, which guarantees payments for a specific duration, such as 10 or 20 years. If the annuitant dies before this period ends, remaining payments are made to a designated beneficiary. A cash refund annuity, or installment refund annuity, guarantees that if the annuitant dies before receiving payments equal to the original premium, the remaining balance is paid to a beneficiary, either as a lump sum or in installments. These options typically result in lower periodic payments compared to a pure single life annuity because the insurer takes on additional risk or guarantees more comprehensive payouts.