Joint Life With Last Survivor Annuity

What it is

A joint life with last survivor annuity (also called a joint-and-survivor annuity) is a lifetime income product designed for two people—typically spouses or partners. It guarantees regular payments as long as at least one of the covered individuals is alive. The contract can also specify payments to a designated third-party beneficiary after one or both original annuitants die, making the product useful in estate planning.

How it works

• Payments begin according to the annuity contract and continue until both covered individuals have died (not term-certain).
• After the first death, the surviving partner typically receives a reduced payment. The reduction percentage is set in the contract.
• A beneficiary or third party can be designated to receive part or all of the payment stream under specified conditions (for example, after the first death).
• Exact payment amounts, timing, and beneficiary rules are defined in the annuity agreement.

Example: A contract might pay $2,000 per month while both are alive. After one spouse dies, the survivor could receive $1,000 per month while the other $1,000 is paid to a child or other beneficiary.

Key features

• Lifetime income that cannot be outlived as long as one annuitant remains alive.
• Choice of survivor payment levels and beneficiary arrangements.
• Useful for protecting a surviving spouse’s income and for leaving a legacy.

Common survivor payout options

• 100% (survivor receives full original benefit)
• 75%
• 66.66%
• 50%

Financial planners often recommend survivor payouts above 50%, since a surviving spouse’s living expenses can remain relatively high compared with two people’s combined expenses.

Suitability and considerations

• Best suited for married couples or partners wanting continued income for the survivor.
• Choose the survivor percentage based on the survivor’s likely needs and other retirement income sources.
• Trade-offs: lower survivor payments can preserve more value for a death benefit or reduce the annuity cost, while higher survivor payments provide greater ongoing income for the surviving spouse.
• Review contract specifics (payment schedule, beneficiary rules, reductions after death, fees) before purchasing.
• Consider how the annuity fits with Social Security, pensions, investments, and other retirement income.

Next steps

Compare product features and survivor options, and consult a financial advisor or estate planner to determine the right structure and payout level for your situation.