Straight Life Annuity

What Does Straight Life Annuity Mean?

A straight life annuity is an investment contract that provides regular payments to the annuitant for the remainder of their life. Upon the annuitant’s death, the payments cease, and this type of annuity does not allow for a beneficiary to be designated. It is one of several ways to structure an annuity, which vary based on how long payments last and whether any money passes to heirs. Typically, you can purchase a straight life annuity either by making regular contributions during your working years or by paying a single lump sum, often after retirement.

Insuranceopedia Explains Straight Life Annuity

A straight life annuity provides a reliable source of income during retirement and is often more affordable than other types of life insurance. Comparing it against the average cost of a life insurance policy can help you decide whether the lower price is worth giving up a death benefit. However, it does not allow for any benefits to be passed on to a beneficiary after your death, making it a potential risk in terms of maximizing the value of your investment. This type of annuity is commonly chosen by individuals without children or close family members. Retirees who do want to leave something behind often pair or replace this option with a seniors life insurance policy, which keeps a payout available for family members.