What Is a Joint Life With Last Survivor Annuity?
Let me explain what a joint life with last survivor annuity really is—it's an insurance product that delivers a lifetime income to both partners in a marriage. You get payments that keep coming as long as at least one of you is alive, and it can even extend those payments to a designated third party or beneficiary after one spouse passes away.
Beyond just offering income you can't outlive—which is basically longevity insurance—this setup lets you leave a financial legacy to someone else or even a charitable cause. You might hear it called a joint and survivor annuity too. Remember, an annuity is simply a financial tool that gives you a fixed income stream, often used in retirement.
Key Takeaways
This is an insurance product tailored for couples, providing regular payments as long as one spouse remains alive. The payment amount is set in your individual contract, based on what you and your partner need. When the first partner dies, the payment usually drops for the survivor. And yes, it can continue payments to a third party or beneficiary even after both of you are gone.
Understanding Joint Life With Last Survivor Annuities
By definition, a joint life with last survivor annuity isn't tied to a specific term—payments go on until both partners in the marriage have died. Typically, after one dies, the survivor gets a reduced payment, with the exact figures laid out in the contract.
You can designate a beneficiary, who might be the same as or different from any third party involved, and that person could receive payments triggered by one spouse's death. For instance, if you have a setup paying $2,000 monthly, after one spouse passes, half of that might go to a child as the beneficiary while the remaining spouse gets the other half—for as long as they live.
That's why this annuity fits into estate planning strategies.
Fast Fact
Just so you know, a joint life with last survivor annuity is often referred to as a joint and survivor annuity.
Suitability Considerations
This annuity suits married couples who want the surviving partner to keep getting benefits until both are deceased. When you're buying one, you need to figure out how much the survivor will actually need financially.
Common payout options include 100%, 75%, 66.66%, or 50% of the original benefit. Since a single person's living costs are often more than half of a couple's, many advisors recommend going above 50%. Keep in mind that lower survivor payments can mean a higher death benefit. If you have other retirement income sources, though, 50% might work just fine.
