Annuity payout options are easy to lock in wrong, because the largest monthly check is the one that stops at death. The spread between life-only and a joint payout is usually the decision. On most single-premium immediate annuities (SPIAs), you cannot change the form after income starts.
At Local Life Agents, we model the same premium across life-only, joint, period certain, and refund before anyone locks an election. You see what a survivor still receives, and what the monthly check gives up to provide it.
Key Takeaways
- Life-only. It pays the highest monthly income and stops at death, so heirs receive nothing further from this contract.
- Joint life. Income continues for a spouse at a lower starting check because the insurer expects to pay for more years.
- Period certain. Payments run for a minimum number of years, and heirs receive what remains if death comes early.
- Refund features. Cash or installment refund returns unrecovered premium to heirs and lowers the monthly check.
- Permanent election. Most SPIA and annuitization elections cannot be changed after income starts.
What is a life-only annuity payout?
A life-only annuity payout pays the highest monthly income and stops when you die. It fits when no one else depends on this check.
The carrier can pay more because nothing is reserved for a survivor or an heir. Payments can end after only a few years, and this contract then pays nothing further.
What is a joint and survivor annuity payout?
A joint and survivor annuity payout covers two lives and continues income after the first death. You choose how much of the check continues, commonly 100%, 66⅔%, or 50%. Starting income is lower than life-only because the insurer expects a longer payout.
The lower check is the price of covering two lifetimes. Couples who share one income usually need some continuation. The percentage you pick decides whether the survivor keeps the full check or a reduced one.
Expert Tip: Run the survivor percentage first
I run the same premium at 100%, 66⅔%, and 50% to the survivor before a couple locks a joint payout. Full continuation keeps the check the same after the first death and cuts starting income the most. A 50% continuation pays more while both are alive and leaves the survivor with half. That drop shows whether the election covers the years that matter. I ask which death they are planning for, then we lock the percentage.
—Ryan Wood
What is a period certain annuity payout?
A period certain annuity payout pays lifetime income and also covers a minimum number of years, commonly 10 or 20. If you die inside that window, heirs receive the remaining payments, and the monthly income is lower than pure life-only.
After the certain period ends, income continues while you are alive and stops at death with nothing reserved for heirs. A term-only payout ends when the years run out, even if you are still living.
What is a cash refund or installment refund?
A cash refund pays heirs the gap between the premium and the income already paid, if you die before that premium comes back. An installment refund pays the same gap as continued payments instead of a lump sum. Either feature lowers the monthly check compared with life-only.
Once income received equals the premium, the refund is used up and the contract pays for life only. The smaller check starts with the first payment, whether heirs later collect the refund or not.
What if you do not annuitize?
You can leave a deferred annuity in force and take systematic withdrawals instead of annuitizing. Withdrawals keep the account value and let you change beneficiaries. You give up the mortality credit, which is the extra lifetime income a carrier can pay because some people die earlier than others.
A single-premium immediate annuity starts income soon after purchase, so you pick the form up front. Withdrawals fit when you may still need the balance, or when an heir should receive the remaining account.
How do annuity payout options compare?
Life-only is the largest check and the smallest amount anyone else receives. Every other annuity payout option buys something for a survivor or heir by reducing that check.
| Payout form | Starting income vs life-only | What happens at death | When it fits |
|---|---|---|---|
| Life-only | Highest | Payments stop | No one else depends on this check |
| Joint and survivor | Lower | Survivor continues at 100%, two-thirds, or 50% | A spouse needs income after the first death |
| Life with period certain | Lower | Heirs receive remaining payments if death is inside the certain period | You want lifetime income plus a minimum number of years |
| Cash or installment refund | Lower | Heirs receive unrecovered premium as a lump sum or as installments | You want heirs protected if death comes before the premium is paid back |
| Withdrawals | You set the amount | Beneficiary receives the remaining account value | You want to keep the account and change who inherits it |
Before you commit
The payout option is the annuity. Life-only pays the most and stops at death. Joint, period certain, and refund pay less every month so someone else still receives money. You generally cannot change the form after a SPIA starts.
Before anyone annuitizes, we lock three things:
- Who has to be paid after the first death. Nobody, a spouse at a reduced percent, or heirs until the premium comes back.
- The same premium. Every form quoted on one case. A life-only quote from one carrier against a joint quote from another is not a comparison.
- That income is the point. If you still want the account and the right to change the beneficiary, do not annuitize. Take withdrawals instead.
Tell us the premium and who the check has to cover. We run the forms side by side before the election is locked.
Who should choose life-only?
Choose life-only when this check can stop at your death and the household still covers its bills. A single retiree qualifies. So does a couple whose survivor has a pension, Social Security, or other income that replaces this payment.
It also fits when other assets are the legacy and this premium has one job: the largest income. Run a joint illustration on the same premium first. If the survivor's remaining income still covers housing, health costs, and daily bills, life-only is a sound election.
Who should not choose life-only?
A spouse with no other income should not elect life-only. The payment ends at the first death, and the survivor cannot turn it back on.
Skip life-only when this contract is meant to leave money to children, or when you may want a different form later. Most SPIA and annuitization elections are permanent. What a named heir can still receive after you annuitize is covered in annuity beneficiary rules.
Higher monthly income and survivor protection are the two sides of the same premium.
Higher monthly income
- Life-only produces the largest check from the same premium
- Fits when a survivor already has income that covers the bills
- Puts the full premium to work on one lifetime
- Leaves other assets free to serve as the legacy
Less for a survivor
- Life-only stops at death, including an early death
- A spouse with no other income can lose this check entirely
- Heirs receive nothing from a life-only contract
- The election is usually permanent once income starts
Conclusion
We see households choose life-only because that was the only check on the illustration. A quote that shows one form from one carrier hides what a spouse keeps after the first death.
We compare life-only, joint, period certain, and refund on the same premium before anyone annuitizes. Independence on this decision means the survivor's income is visible before the election is locked. From there, the annuities hub covers the rest of the annuity decision.
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