Straight Life Annuity

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DEFINITION of '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.

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BREAKING DOWN 'Straight Life Annuity'

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 do 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.

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RELATED FAQS
  1. What are the best ways to sell an annuity?

    The best ways to sell an annuity are to locate buyers from insurance agents or companies that specialize in connecting buyers ... Read Full Answer >>
  2. How are non-qualified variable annuities taxed?

    Non-qualified variable annuities are tax-deferred investment vehicles with a unique tax structure. After-tax money is deposited ... Read Full Answer >>
  3. Can a variable annuity be rolled into an IRA?

    You can roll qualified variable annuities, such as other qualified retirement plan accounts, into a traditional IRA. Non-qualified ... Read Full Answer >>
  4. Are variable annuities subject to required minimum distribution (RMD)?

    Variable annuities are insurance contracts that provide tax-deferred growth of assets that can later generate a guaranteed ... Read Full Answer >>
  5. What level of reserve ratios is typical for an insurance company to protect against ...

    In the United States, and most developed nations, regulators impose required statutory capital reserve ratios on insurance ... Read Full Answer >>
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