Single Life vs. Joint-and -survivor annuity
In a single life annuity, the annuity payment will end at your death. For joint-and-survivor annuity, the annuity payment will be there for both you and your spouse. Of course, compared with single annuity, for the same amount of upfront money you hand over to insurance companies, now you will receive less monthly payments for joint-and-survivor annuity.
Guaranteed Payments or Non-guaranteed Payments
For guaranteed payment annuity, you are guaranteed with a minimum number of years of annuity payment. For example, for a single life with 10-year period certain annuity, if you die within 10 years after start receiving the payment, your heirs will keep receiving the payments for the rest of the 10 years.
Cost of Living Rider or Not
If you want your monthly payment amount to grow with inflation, you can add a cost-of-living rider, which is probably a necessity given the longevity risk people face.
In our next blog post, we will discuss what are the major drawbacks of the immediate annuity and how to deal with them.