What Does Whole Life Annuity Mean?
A whole life annuity is an investment contract that make regular payments to its investors for as long as each investor is living.
With every annuity, when an investor buys a contract, they need to decide how long they want to receive payments. A whole life annuity makes payments for as long as the investor is still alive and is the longest time frame for payments. Most annuity companies give investors the choice of receiving payments monthly, quarterly, or annually.
A whole life annuity is also known as a life annuity.
Insuranceopedia Explains Whole Life Annuity
Whole life annuities are popular choices for retirement. A retiree can use some of their savings to buy a contract and turn that money into guaranteed payments for the rest of their life. The annuity company will be in charge of managing the funds to make sure the investor always gets their payments. The whole life option is safest because the money never runs out. In exchange, the payments from a whole life annuity are smaller than the payments from shorter contracts that expire after a number of years.
Investors can also choose whether they only want to base the contract on their own life or if they want to base the contract on a second person as well. For example, a married couple can buy a shared whole life annuity so they both will have income for the rest of their lives. However, splitting a whole life annuity with two people will lead to smaller payments.