Annuity Payout Options Compared
The payout option you pick sets your monthly check for decades and decides what heirs receive. Here is how each option prices and who each suits.
Life-only pays the most but stops at death. Period-certain guarantees payments for 10 to 20 years to heirs. Joint-and-survivor covers two lives at a reduced amount. Match the option to whether legacy or maximum income matters more.
Life only: maximum income
Payments continue for your life and stop at death, with nothing to heirs. Because the insurer keeps the remainder when you die early, survivors effectively subsidize the long-lived, which is why this option pays the highest monthly amount.
Best for single retirees with no legacy goals who want the biggest check. The risk is dying early and leaving money on the table, which bothers some buyers more than the math warrants.
Period certain: income plus legacy
Guarantees payments for at least 10, 15, or 20 years. Die in year 3 of a 20-year certain annuity and your beneficiary receives the remaining 17 years of payments. Live past the period and payments continue for life.
The monthly check runs lower than life-only, since the insurer prices in the guaranteed heirs' payments. This is the popular middle ground for buyers who want high income but cannot stomach the use-it-or-lose-it feature.
Joint and survivor: two lives
Covers you and a spouse: payments continue, often at 50 to 100 percent of the original amount, until the second death. The monthly amount is lower than single-life because the expected payout period is longer.
Choose the survivor percentage deliberately. A 100 percent survivor option protects the spouse fully at the lowest initial check; 50 percent splits the difference. For couples where one spouse lacks other income, 100 percent is usually worth the haircut.
Skip the arithmetic
See how payout length changes the check with the free annuity calculator.
Payout option questions
Which annuity payout option pays the most?
Every guarantee you add, a certain period, a survivor, inflation adjustments, lowers the monthly amount because the insurer expects to pay longer. Rank by monthly check: life-only first, then period-certain, then joint-and-survivor, then inflation-adjusted last.
Should I add inflation protection to an annuity?
A 3 percent annual increase rider can cut the starting payment by a quarter or more. An alternative: buy the bigger fixed check and keep a growth portfolio alongside to offset inflation. Inflation riders make most sense when the annuity covers nearly all spending.