Below are some of the most common annuity payouts. Not all annuities provide these options and some may offer different payouts.
In some annuity contracts, the company may pay a death benefit to your beneficiary if you die before the income payments start. The most common death benefit is the contract value or the premiums paid, whichever is greater.
Fixed Amount (also called Systematic Withdrawal Schedule)
You can select the amount of payment you want to receive each month. The payments continue until you stop them or you run out of money. The insurance company does not guarantee that you'll not outlive your income payments. How much you receive and how many months you receive payments depends on how much you have in your account.
Fixed Period (also called Period Certain)
You choose a defined period (e.g., 10, 15, or 20 years) to receive the payout of your annuity. Payments after your death may go to your designated beneficiary. Example: If you choose a 15-year fixed-period payout and die within the first 10 years, the contract is guaranteed to pay your beneficiary for the remaining five years.
Joint and Survivor Life
The company pays you or your survivor for as long as either of you lives. The amount of the regular payments are typically smaller than the Life Only option, as the company now pays for the longer of two lifetimes.
The company makes payments for as long as you live. The payment amount is mainly decided by life expectancy – the longer your life expectancy, the smaller the payment amount. There is no guarantee you'll get the total amount you accumulate. However, you're guaranteed the income for the rest of your life. If you live a long time, you could receive more than the accumulated value of the annuity.
Life with Period Certain (also called Guaranteed Term)
This gives you an income stream for life, like the Life Only option. You also have the option to select a guaranteed period, such as a 10-year guaranteed term. This means your annuity must pay your estate or beneficiaries even if you die before that guaranteed period ends.
Lump Sum Payment
This allows you to receive your annuity payout in one lump sum. This option is not usually recommended because, in the year you take the lump sum, you'll have to pay income taxes on the entire investment-gain portion of your annuity.