If you die, normally your annuity payments will stop and the pension fund used to buy your annuity will be lost. However there are a number of options you can take to ensure a beneficiary can still benefit from your pension savings or annuity income.
Does an annuity have beneficiaries?
You do have the option of naming a beneficiary on your annuity, and with certain types of payout options that beneficially could receive the money in your annuity when you die. Other options just pay out during your lifetime, and the payments stop when you die.
What happens to an annuity when the beneficiary dies?
Life Annuity. Upon death, all payments stop. However, another option is a joint-life annuity that guarantees payment for both the lifetime of the annuitant and that of your beneficiary. Upon the annuitant’s death, their spouse or other beneficiary continues to receive payments until their death.
What happens to the money in a single life annuity?
Single life or life only annuity: You receive lifetime payments from the annuity. However, it doesn’t pay any survivor benefits. Life annuity with period certain: Annuity payments extend over a minimum time period, such as 10, 15 or 20 years. If you pass away during that time, any remaining payments go to your named beneficiary.
What happens when you get a refund on an annuity?
Life with Refund. Payments will continue to you for as long as you live. But you or your beneficiary are guaranteed to get a least the amount you paid in. If you die before that amount is paid out, your beneficiary will get payments up to the amount that you initially paid for the annuity.
What happens when you outlive the period certain in an annuity?
If you outlive the period certain, the payments stop. The different structures will result in different payout amounts for the same premium (what you pay for the annuity). For instance, a life-only annuity will pay more on a monthly basis than a joint life option with a period certain for the same premium.
