Generally, an annuitant has a great deal of flexibility in deciding when to “annuitize” the policy and begin receiving annuity benefit payments.
Under a straight life annuity option, you receive a guaranteed income for as long as you live. However, there are no further benefits paid to anyone after you (the annuitant) die. This type of annuity contract is sometimes called a “pure” annuity. This type of annuity provides the maximum amount of periodic benefit payment to a sole annuitant compared to the premiums paid. It is generally recommended for someone who wants to maximize the size of annuity payouts, and who either has no dependents or has provided for dependents through other means.
With this option, the company guarantees benefit payments for a specified number of years regardless of whether you die prior to the end of the benefit period. The guaranteed period is often called the “period certain” and is frequently 10 or 20 years. If you die before the end of the specified period, the company will pay the remainder of the benefits to your designated beneficiary or estate.
You receive an income for as long as you live. If you die within a certain period after you begin receiving benefits, usually 10 or 20 years, your designated beneficiary will receive benefit payments for the remainder of the guaranteed period. Because this continuation feature is an added benefit, the amount of the periodic benefit payment to a life annuitant is less (based upon premiums paid) than benefits paid under a straight life annuity.
This option allows you to receive benefit payments in the amount you choose until the funds are exhausted. If you die before the payment of all funds, the company pays the remaining proceeds to your beneficiary or estate in a lump sum.
You receive an income for life. However; if you die before you receive total benefits equal to your premiums paid, your beneficiary receives regular installments until total benefits paid equal the total premiums paid.
This annuity option provides benefits until the last designated recipient dies. Under some annuities of this type, the amount of the periodic benefit payment is reduced after the death of the initial covered annuitant.