ANNUITY PAYOUT OPTIONS
LIFE ONLY/STRAIGHT LIFE
This payout option will give the annuitant the largest periodic payment from the contract, and the investor will receive payments from the contract for the rest of his or her life. When the investor dies, however, no additional benefits are paid to the investor's estate. If an investor has accumulated a large sum of money in the contract and dies unexpectedly shortly after annuitizing the contract, the insurance company keeps the money in its account.
LIFE WITH PERIOD CERTAIN
A life with period certain payout option will pay out from the contract to the investor or to the investor's estate for the life of the annuitant or for the period certain, whichever is longer. If an investor selects a 10-year period certain when the contract is annuitized and the investor lives for 20 years more, payments will cease upon the annuitant's death. However, if the same investor died only two years after annuitizing the contract, payments would go to the investor's estate for another eight years.
JOINT WITH LAST SURVIVOR
When an investor selects a joint with last survivor option, the annuity is jointly owned by more than one party and payments will continue until the last owner of the contract dies. For example, if a husband and wife are receiving payments from an annuity under a joint with last survivor option and the husband dies, payments will continue to the wife for the rest of her life. The payments received by the wife could be at the same rate as when the husband was alive or at a reduced rate, depending on the contract. The monthly payments will initially be based on the life expectancy of the youngest annuitant.
FACTORS AFFECTING THE SIZE OF THE ANNUITY PAYMENT
All of the following determine the size of the annuity payment:
• Account value
• Payout option selected . Age
• Account performance vs. the assumed interest rate (AIR)