What is a Life Only Annuity
Jason Stolz CLTC, CRPC
What is a Life Only Annuity? A Life Only Annuity—also called a straight life annuity—pays guaranteed income for as long as you live, with no payments continuing after your death. It’s the simplest and highest-paying form of lifetime income, designed purely to maximize monthly cash flow during your lifetime.
At Diversified Insurance Brokers, we help clients compare Life Only payouts from over 100 A-rated carriers nationwide. For retirees who prioritize the highest possible income rather than leaving a residual balance to heirs, this option offers unmatched payout efficiency and security.
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How a Life Only Annuity Works
When you purchase a Life Only Annuity, you exchange a lump sum for a guaranteed monthly payment for life. Because there’s no refund or survivor benefit, the payout is higher than any other income option—often 10–20% more than comparable joint or refund structures. If you pass away soon after payments begin, the insurer keeps the remaining balance, but if you live longer than expected, the insurer continues paying you indefinitely.
Who a Life Only Annuity Fits Best
- Retirees focused on maximizing personal income rather than estate preservation.
- Individuals without dependents or other income obligations.
- Those who want to cover essential living expenses for life.
- People already providing for beneficiaries through other assets like life insurance.
Advantages of a Life Only Payout
- Highest guaranteed income of any payout option.
- Simplicity—no additional riders, fees, or complexity.
- Guaranteed lifetime coverage regardless of market performance or account depletion.
Drawbacks to Consider
- No beneficiary or refund value after death.
- Not suitable for those who wish to leave unused annuity funds to heirs.
- Cannot be converted to joint life once issued.
Many clients balance this by allocating only part of their portfolio to Life Only income, while protecting other assets for beneficiaries.
Alternative Lifetime Options
If you’d like lifetime income and beneficiary protection, consider:
- Life with Period Certain Annuity — guarantees payments for life or a fixed period, whichever is longer.
- Cash Refund Annuity — returns any remaining principal to your beneficiaries.
- Joint Lifetime Income Annuity — continues income for your surviving spouse.
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FAQs: Life Only Annuity
How does a Life Only Annuity differ from other payout options?
It provides the highest income but stops payments when the annuitant dies—no refund or survivor benefit continues.
Can a Life Only Annuity be changed after purchase?
No. Once the contract is annuitized, the payout type and amount are fixed for life.
Who is a Life Only option best for?
It’s ideal for single individuals or retirees prioritizing maximum monthly income over leaving an estate benefit.
Can I combine a Life Only Annuity with other income streams?
Yes. Many clients use it to cover core living expenses while investing other funds for liquidity and legacy goals.
Are Life Only payments taxable?
Payments from qualified funds (IRA or 401k) are fully taxable as ordinary income. Non-qualified contracts apply the exclusion ratio until the principal is recovered.
About the Author:
Jason Stolz, CLTC, CRPC, is a senior insurance and retirement professional with more than two decades of real-world experience helping individuals, families, and business owners protect their income, assets, and long-term financial stability. As a long-time partner of the nationally licensed independent agency Diversified Insurance Brokers, Jason provides trusted guidance across multiple specialties—including fixed and indexed annuities, long-term care planning, personal and business disability insurance, life insurance solutions, and short-term health coverage. Diversified Insurance Brokers maintains active contracts with over 100 highly rated insurance carriers, ensuring clients have access to a broad and competitive marketplace.
His practical, education-first approach has earned recognition in publications such as VoyageATL, highlighting his commitment to financial clarity and client-focused planning. Drawing on deep product knowledge and years of hands-on field experience, Jason helps clients evaluate carriers, compare strategies, and build retirement and protection plans that are both secure and cost-efficient.
