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Single Life Annuity vs. Joint Survivor Annuity

Stan Haithcock
August 21, 2023

Single life versus joint and survivor life annuity. That's what you're looking for, right? That's what I'm going to tell you about. Stan The Annuity Man, America's annuity agent, licensed in all 50 states. And I know my stuff, and I also know about this topic. We will talk about Immediate Annuities and Deferred Income Annuities structuring choices but focusing solely on these joint life versus single life, how that all works, and how you can customize the quotes to meet your specific goals. So, hang in there with me.

Like a Gallon of Milk

So single life versus joint life, which is better? There's no good answer to that. It really comes down to what you want to contractually solve for when you're setting up a lifetime income stream. Understand that single life is going to pay higher than joint life. Why? Because single life involves covering and guaranteeing for one life, and joint life covers and guarantees for two. So, that makes a ton of sense, correct? Now the other thing you need to understand is any lifetime income quotes where you're getting an Immediate Annuity, Deferred Income Annuity, Qualified Longevity Annuity Contract, or even a lifetime benefit income rider, think of it like a gallon of milk. A gallon of milk expires every seven to 10 days. So do annuity quotes. You can't get a quote, think about it for two or three weeks, then come back and say, "Hey, Stan The Annuity Man. That's the one I want to go with." I'm going to have to re-quote everything, and most likely, that quote has changed since I sent it to you three weeks ago. So put that in the back of your head. They're commodity quotes, like buying a plane ticket. You punch in exactly what you want and then find the best contractual guarantees for your specific situation. Shopping through all carriers, as many as humanly possible, because sometimes carrier X will finish number one this week, and that same exact carrier two weeks from now will finish eighth. Why? Because they're trying to attract money for different specific age ranges and life expectancies, and so that's the reason you got to quote all carriers.

The Structure

So, how many lives is single life going to cover? One. Joint and survivor cover two. Now you can structure this in a myriad of ways. You can structure it as single life or joint life only, or you can structure it with a cash refund, installment refund, and a period certain attached to it. Regardless, if it's a lifetime guarantee, it will cover for as long as you live, period. I don't care if it's to 150 or 160. I don't care if there's a medical breakthrough. That's the transfer of risk-benefit proposition if you live forever, they, the annuity company, is on the hook to pay. But understand that the way that you structure the backend, whether it's a cash refund, installment refund, or period certain, that's the backstop in case you die early in the policy. You want to make sure that somebody in your family, beneficiaries, gets a form of payment, or a refund of some of the money, depending on how you want to structure it.

It's Customizable

The other thing is on joint and survivor, is that you can do it joint life with 100%. What that means is you and your wife, let's say it's you and your wife, and if you die, 100% of the income stream goes uninterrupted and unchanged for the surviving spouse's life. But you can customize it. You can say, "Okay, I don't want joint, and 100, I want joint with 75%." What does that mean? That means that it's going to be joint, it's going to be joint life with 75%, meaning that you both are alive, and it's going to be an X amount of payment. But when you die, the wife or spouse will get 75% of that initial number. So, you could do it anyway. You could do joint with 50%, okay?

Again, it's customizable; you can do it any way you want. The more backstop, the more the percentage guarantee, which means the lower the payment. So joint with 50% survivor will be a higher payment than joint with 100% survivor, if that makes sense. Just think of it from an annuity company standpoint. They don't give anything away. There are no philanthropists at annuity companies. They'll structure it any way you want. But the more you are shouldering, the more risk you're shouldering, the higher the payment. If it were joint life only, that would be the highest payment. Because when the second spouse dies, the money goes poof. What you're trying to do here is make sure that, depending on your specific situation and what type of income gap you need to fill, you can structure it these ways. Joint life with a 100; it doesn't have to be an even number. It could be a weird number; it could be 23%. I mean, annuity companies will quote anything. You just have to tell us about your specific goals for your specific situation to answer the two questions. What do you want the money to contractually do? And when do you want those contractual guarantees to start?

Now with the single life, the only options you have after that is how you structure the backend, whether it's installment refund, cash refund, or a period certain attached to that single life. That's how that works.

Client Example

We went through all the myriads of how to design joint and survivor, joint survivor 100%, joint survivor, 50%, whatever. So, why would you do one or the other? Why wouldn't everyone do joint with 100% so that the spouse, the surviving spouse, will get the same income for the rest of their lives? Well, I'll give you a story. A guy called the other day, and he wanted a specific number that he wanted to hit monthly, but he wanted it joint with his spouse. But he had a ton of life insurance in place, so when he passed away, that life insurance would come in, and the wife could use the money either to buy another Immediate Annuity or just put it in the bank and take money out. So, the joint with a 50% survivor made sense for him in that specific situation because he had other money coming in. Once again, I implore you to remember this, annuities are commodity products, but they're customizable commodity products. What you need to tell us when you book a call is to say, "Hey, this is exactly what I'm trying to do. Can we structure it that way? Can we have all the carriers bid on that specific structure?" So run that in the back of your head. Don't accept some advisor saying, "Yeah, you should do joint and 20," or "You should do joint life with a period certain, or joint life with installment refund." No. Think about your situation and how you want it to work, not only from the spouse's or partner's standpoint but also how the beneficiaries will receive the money. Everything's customizable.

Okay, so we talked about structuring annuities and lifetime income payouts. Just remember they're commoditized, and you can get all the quotes you need on our website, and we pretty much represent every carrier out there. And we'll quote for the highest specific contractual guarantee for your situation.

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