Straight Life

Straight Life

An annuity or other insurance plan that provides the policyholder with monthly payments for the remainder of his/her life. After death, however, the payments cease, and the policyholder does not name a beneficiary. Like all annuities, one may buy the plan with a lump sum or with a series of payments over a number of years, usually ending around retirement. Straight life policies are usually less expensive than other annuities because they end in one's death, which is presumably before the death of one's spouse, children, and other beneficiaries. However, they provide fewer services, notably a widow's benefit.

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Straight life. A straight life insurance policy is a type of permanent insurance that provides a guaranteed death benefit and has fixed premiums. This traditional life insurance is sometimes also known as whole life insurance or cash value insurance.

With a straight life policy, a portion of your premium pays for the insurance and the rest accumulates tax deferred in a cash value account.

You may be able to borrow against the cash value, but any amount that you haven't repaid when you die reduces the death benefit.

If you end the policy, you get the cash surrender value back, which is the cash value minus fees and expenses. However, ending the policy means you no longer have life insurance and no death benefit will be paid at your death.