What is a Joint Lifetime Income Annuity
Jason Stolz CLTC, CRPC
A Joint Lifetime Income Annuity is designed to provide guaranteed income for as long as either spouse is alive. It extends the concept of a personal pension by ensuring financial stability across two lives—protecting couples from longevity risk and income interruption. At Diversified Insurance Brokers, we help clients compare joint-life payout options from over 100 A-rated carriers to maximize monthly income and preserve survivor benefits.
Unlike single-life annuities that stop when one person passes, a joint-life annuity continues income for the surviving spouse, ensuring peace of mind and financial continuity. Let’s look at how it works, who it suits best, and how you can model your potential payments below.
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How a Joint Lifetime Income Annuity Works
This annuity structure pays a stream of income that lasts for two lives—typically a married couple or domestic partners. Payments continue as long as either person is alive. When one spouse passes away, the other continues receiving payments at either 100%, 75%, or 50% of the original amount, depending on how the contract is set up.
- Single premium immediate annuities (SPIAs): Provide income that starts right away.
- Deferred income annuities (DIAs) or fixed indexed annuities with income riders: Allow you to defer payouts for higher lifetime income later.
- Rider flexibility: Many joint annuities include options like cost-of-living adjustments (COLA), death benefits, or liquidity features.
Benefits of Joint-Life Income
- Protection for both spouses: Income lasts until the second spouse passes away.
- Predictable cash flow: Monthly income you can count on regardless of market performance.
- Tax-deferred growth: Deferred annuities continue compounding earnings tax-deferred until withdrawals.
- Custom survivor options: Select 100%, 75%, or 50% continuation to balance income and cost.
- Optional COLA riders: Add inflation protection to preserve purchasing power.
Who Should Consider a Joint Lifetime Income Annuity?
This strategy is ideal for couples who want reliable income through both retirements. It’s especially useful if one spouse expects to live longer or if their Social Security or pension benefits end at death. A joint annuity ensures that the survivor can maintain their standard of living without worrying about market losses or outliving savings.
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FAQs: Joint Lifetime Income Annuities
What is a joint lifetime income annuity?
An annuity that pays income as long as either spouse is alive. When one passes, the survivor continues receiving payments at a chosen percentage (100%, 75%, or 50%).
Does the survivor keep receiving income for life?
Yes. The contract guarantees lifetime payments for the surviving spouse, ensuring continued financial security.
Do joint annuities pay less than single-life annuities?
Usually, yes. Since the insurer covers two lives, the monthly payout is slightly lower, but the coverage period is longer.
Can I add cost-of-living adjustments?
Yes. Optional COLA riders can increase payouts annually to offset inflation, though starting payments are lower.
Are there tax advantages?
Growth is tax-deferred. Taxes apply only when you withdraw or start income. Qualified annuities follow IRA/401(k) rules.
Can both spouses be co-owners?
Yes. Most carriers allow joint ownership and annuitant status, simplifying beneficiary designations and survivor continuation.
