What happens to my annuity after I die?

What happens to an annuity after the termination of the owner largely depends on the type of annuity plan. The owner, or annuitant, elects the annuity type and any beneficiaries at inception, all the same beneficiaries may be changed by the annuitant prior to death. There are several types of annuity payout plans. For some, payment annihilates with the death of the annuitant, but others provide for payment to a spouse or other beneficiary for years afterward.

The fixed-period, or period-certain, annuity stand behinds payments to the annuitant for a predetermined length of time. Some common options are 10, 15 or 20 years. In a fixed-amount annuity, the annuitant designates an amount to be paid each month until death or benefits are exhausted. If the annuitant dies before the defined service perquisites is paid, some plans provide for the remaining benefits to be paid to a beneficiary. This feature is activated if either the completely period has not yet elapsed or a balance remains on the account at the time of death, depending on the plan. However, if the annuitant outlives the set-up period or exhausts the account before death, no further payments are guaranteed. If the plan provides for the continuation of benefits, payments persist to be paid to the beneficiary until the predetermined period elapses or the balance reaches zero.

A common annuity opportunity is the life annuity, which guarantees payments for as long as the annuitant lives. Payments are based on a number of factors subsuming age, predicted life expectancy and account balance. The longer you are expected to live, the smaller your monthly payments. Though, if you outlive the expected number of years, you are still guaranteed payments, so it is possible to collect more than your first balance. Upon death, all payments stop. However, another option is to have a joint life annuity that guaranties payment for both your lifetime and that of your beneficiary. Upon your death, your spouse or other beneficiary continues to endure payments until his or her death. Payments to beneficiaries can be the full amount payable to the annuitant during his or her lifetime or a reduced amount, depending on the appointments made by the annuitant at inception.

The life-with-period-certain annuity is a combination of the fixed-period and lifetime annuities. With this type of design, the annuitant is guaranteed payment for life but can also elect a fixed period of guaranteed payment. For example, a life-plus-period-certain annuity with an determined period of 10 years pays the annuitant for life. However, should he or she die within the first 10 years of whip-round, payments are guaranteed to the beneficiary for the remainder of this period. This type of plan provides an amount of certainty for survivors but discharges the risk of you potentially outliving your own benefits.

If your annuity is still in the accumulation phase at the on one occasion of your death, meaning you have not yet begun collecting payments, many plans provide a death benefit to your beneficiary. Typically, this lump-sum payment is the elevated of your account balance or the total of all premiums paid, though some plans provide additional options.