Whole Life Annuity
What Does Whole Life Annuity Mean?
A whole life annuity is an investment contract that provides regular payments to the investor for as long as they are alive.
When purchasing an annuity, investors must decide how long they want to receive payments. A whole life annuity offers payments for the investor’s entire lifetime, making it the longest payment duration. Most annuity companies allow investors to choose the payment frequency, such as monthly, quarterly, or annually.
A whole life annuity is also referred to as a life annuity.
Insuranceopedia Explains Whole Life Annuity
Whole life annuities are popular choices for retirement planning. Retirees can use a portion of their savings to purchase a contract that guarantees regular payments for the rest of their lives. The annuity company manages the funds to ensure the investor consistently receives their payments. The whole life option is considered the safest because the payments continue as long as the investor is alive, with the principal never running out. However, in exchange for this security, the payments from a whole life annuity tend to be smaller compared to those from shorter contracts that expire after a set number of years.
Investors can also choose to base the contract on their own life alone or include a second person. For example, a married couple can purchase a shared whole life annuity, ensuring both will have income for life. However, sharing the annuity results in smaller individual payments.
