Annuities For Couples

Everybody yearns for financial independence. We all want to ensure a continuous flow of money so that we do not experience any bad days. At the same time, we also want to ensure that our family, especially our spouse leads a comfortable life and our death does not disrupts his/her usual life routine. You become even more concerned for your spouse if he/she is financially dependent on you and any your death may well put your spouse into a financial quagmire.

To ensure our spouse with a steady stream of income, most of us make investments. Stocks, money market funds, CDs are some popular investment avenues. However, the jittery stock market and the ever-shrinking income from money market funds and CDs have compelled people to scour for other options. And for most of them, annuity seems to be the most attractive option.

Annuities are policies offered by insurance companies, wherein they promise to pay the annuitant certain sum of money. For receiving this income, the annuitant has to either make a lump sum contribution or contribute in installments. The annuitant has the option to receive the income for a fixed period or for lifetime. Similarly, he can choose to receive a fixed sum of money or varying income.

However, many insurance companies now also offer annuity plans that are specifically designed for couples. These are termed as joint annuities. So, what are joint annuities? These annuities offer to continue making payment to the spouse of the annuitant in case of the annuitant's death. Thus, joint annuities are annuities that are specially designed for couples. These annuities allow them to have a steady flow of income during the lifetime of both the spouses as well as after the death of the annuitant.

Features of joint annuities:

The joint life tables differ from individual life tables because the life expectancy of the second-to -die in case of married couple is higher than that of an individual.
The payment in case of joint annuities vary with time. This is because the survivor benefit option allows making different payment, when both the partners are alive and when one of them is dead.
If compared to single life annuity, the payout in case of a joint and survivor annuity is less. When there is a single annuitant, the insurance company is not obliged to make payments after the death of the annuitant. Whereas in case, of joint and survivor annuity policy, the insurance company has to make payments to the spouse, even after the death of the annuitant.

Types of joint annuity contracts:

Joint life annuity with a last survivor payout rule: This type of contract is also known as joint and survivor annuities: Here the annuitant will continue to receive monthly or quarterly payment, when both are alive. Upon the death of one of the member, the surviving member will continue to receive a fraction of this payment. This fraction is pre-decided while the contract is being drawn.
Joint life policy with a contingent survivor benefit: Here only one member of the couple is termed as a primary annuitant. The sum paid when both the partners are alive and during the primary annuitant's lifetime is the same. This means that the death of the secondary annuitant does not lead to a decrease in the payment. However, if the primary annuitant dies before the second annuitant, the second annuitant receives a fraction of the original amount.

Thus, if you want to make sure that your spouse does not struggle financially, in case you meet with a premature death, you should go in for a joint annuity.

ˆ Top