Straight Life Income
A straight life income annuity option (often called a life annuity or a straight life annuity) pays the annuitant a guaranteed income for the annuitant’s lifetime. When the annuitant dies, no further payments are made to anyone. If the annuitant dies before the annuity fund (i.e. the principal) is depleted, the balance, in effect, is forfeited to the insurer.
A cash refund option provides a guaranteed income to the annuitant for the life and, if the annuitant dies before the annuity fund (i.e. the principal) is depleted, a lump-sum cash payment of the remainder is made to the annuitant’s beneficiary.
Similar to a cash refund, the installment refund option guarantees that the total annuity fund will be paid to the annuitant or to the annuitant’s beneficiary. The difference is that under the installment option, the fund remaining at the annuitant’s death is paid to the beneficiary in the form of continued annuity payments, not as a single lump sum.
Life With Period Certain
Also known as the life income with term certain option, this payout approach is designed to pay the annuitant an income for life, but guarantees a definite minimum period of payments.
Joint and Full Survivor Option
The joint and full survivor option provides for payment of the annuity to two people. If either person dies, the same income payments continue to the survivor for life. When the surviving annuitant dies, no further payments are made to anyone.
The period certain income option is not based on the life contingency; instead, it guarantees benefit payments for a certain period of time, such as 10, 15, 20 years, whether or not the annuitant is living. At the end of the specified term, payments cease.