The most common worry about income annuities is simple: “What if I die soon after I buy it?” Guarantee options are the answer. You choose one when you buy, and it can’t be changed later.
| Option | Monthly income (before tax) | If you die early |
|---|---|---|
| Life only | Highest | Payments stop. Nothing goes to heirs. |
| Life + 10 years certain | A little lower | Your beneficiary gets the rest of the first 10 years of payments. |
| Life + cash refund | A little lower | Your beneficiary gets any premium not yet paid back to you, in a lump sum. |
Life only
Pays the most each month, for as long as you live — and nothing after. It makes sense when the income matters most and other assets will go to your heirs.
Life with period certain
Pays for life, and guarantees a minimum number of years (10 is common; 5, 15 and 20 exist). If you die in year three, your beneficiary receives the remaining seven years of payments. If you live past the period, payments simply continue for life.
Life with cash refund
Guarantees that you and your heirs together get back at least what you paid in. If you put in $200,000 and had received $80,000 when you died, your beneficiary would receive the remaining $120,000.
Joint life: covering two people
Couples can choose joint-and-survivor income, which keeps paying until the second person dies. Monthly income is lower than single life because it’s expected to pay longer. Guarantee options can be added to joint life too.
