Survivorship Annuity

What Does Survivorship Annuity Mean?

A survivorship annuity is a combination of life insurance and an annuity that provides a lifetime income to the surviving beneficiary. The policyholder pays regular premiums, and upon their death, the survivor receives a monthly income for life, rather than a lump sum death benefit. Because the payout continues for the rest of the beneficiary’s life instead of arriving as a single sum, survivorship annuities often appeal to couples who want to compare how this structure differs from standard annuity options.

It is also referred to as a reversionary annuity.

Insuranceopedia Explains Survivorship Annuity

If the beneficiary dies before the policyholder, the contract becomes void, and no benefits are paid. Additionally, because the premium is based on the life expectancy of both the policyholder and the beneficiary, the beneficiary cannot be changed. As a result, the premiums are typically similar to those of term life policies rather than permanent ones. The premium structure also explains why buyers sometimes weigh this type of policy against the broader term vs permanent life insurance decision before committing. This makes a survivorship annuity a more affordable option for older individuals, and those couples looking into it may want to compare quotes from life insurance companies that specialize in seniors before deciding.