A new single-premium immediate annuity is designed to meet survivorship needs by having two annuitants.
Issued by Presidential Life Insurance Company, Nyack, N.Y., the policy provides that the second annuitant receives the full payment for a limited payment period from 5 to 20 years (similar to a period certain annuity). This period is elected at the time of application.
The second annuitant must survive this entire period in order to receive all the payments.
Called the Income & Legacy Annuity, the policy is a limited payment survivorship contract, says Gary Mettler, vice president of Presidential.
If the second annuitant predeceases the first annuitant, the first annuitant continues to receive a lifetime annuity at the same payment rate, the company says.
“The design contrasts with traditional period certain and single life and refund SPIAs, which have one annuitant and a beneficiary,” he says. “It is also different from traditional joint contracts, which pay for the entire lives of both annuitants.”
In this contract, it does not matter when the first annuitant dies, says Mettler, because the second annuitant payments start at the time of this death, whenever that occurs. By comparison, he says, with a traditional period certain and life annuity contract, no one knows when the annuitant is going to die, so the other party–the beneficiary–could receive little or nothing.
By limiting the survivor payment duration to 5 to 20 years, the design helps boost the annual income payout, as compared to traditional joint contracts, he says.
Maximum issue age, for the oldest annuitant, is 90. The policy can be issued with a single premium of $5,000 to $500,000. It is available in all states except New Hampshire.