What are the Different Repayment Options that Annuities Offer?
As I’ve explained earlier, with an annuity, the longer you live, the greater the return you can expect to earn. This means of course, that if you die early, you may never recoup the amount you originally paid for the annuity. Because the different needs of investors, there are several repayment options from which to choose:
1. Individual life annuity. Here, payments (which are the highest of any option) are continued throughout your life with no further payment made after you die even if you should die only a year or two after payments begin. This plan is designed only for a person who wants the highest amount of regular income and has no spouse or other dependents who might need financial support after the annuitant dies. If you are married, federal law requires you to obtain a notarized waiver of benefits from your spouse.
2. Joint survivor annuity. This plan provides monthly payments for as long as either you or your spouse lives. In other words, at your demise your spouse would continue receiving payments until he or she died. It is obvious that the payments each month would be smaller than the individual life annuity because the payments extend to two lives and therefore will have to stretch over a longer period of time.
3. Guaranteed minimum annuity. Under the terms of this annuity, there is an established minimum payout. In the event that the annuity holder dies shortly after the payout begins, continued payments will be made to the beneficiaries for a specific specified period of time. For example, an investor might buy this type of policy in order to receive payments for the rest of his/her life but wants to make certain that the insurance company will make payments for, say, at least ten years to the beneficiaries. This is known as a 10-year certain contract. If the investor dies after receiving two years of payouts, he or she will be assured that whoever is designated as the beneficiary will receive money for the next eight years. For this privilege, the investor will receive a smaller pay back (about 6% less than from the other previously mentioned options). Also, if the investor should die before distribution begins the named beneficiaries can receive the full value of the annuity, which will bypass probate and its time and cost procedures.

Thought for the Week
The bad thing about recession is that it always comes at such a bad time…just when everybody is out of work.