straight life annuity

Straight Life Annuity

An insurance product that makes periodic payments to the annuitant until his or her death, at which point the payments stop completely. These products do not allow annuitants to designate a beneficiary. Straight life annuities may be bought over the course of the annuitant's working life by making periodic payments into the annuity, or they may be purchased with a single lump sum payment. Usually, lump sum purchases are made at, or shortly after, the annuitant's retirement.

Notes:

Because these products make no payments to beneficiaries and no further payments after the annuitant's death, they are less expensive than other life insurance products that pay out to beneficiaries. The catch is that people who buy these types of annuities with their life savings do not have the option of continuing to support their dependents once they have died.

See also: Annuitant, Annuity, Beneficiary, Death Benefit, Dependent, Fixed Annuity, Life Insurance

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straight life annuity

An annuity that makes payments to the recipient only for the duration of his or her lifetime. No minimum number of payments and no minimum sum to be paid are guaranteed. All payments end upon the recipient's death. This annuity is desirable for someone with no dependents who wishes to obtain the largest possible payments.