A joint annuity is a type of annuity for which the annuity is paid out for the lifetimes of either the joint annuitants or the primary annuitant. Annuities are contracts that pay continual or specific amount of money for a certain period of time which may include the entire lifetime of the annuitant.
Annuities are much like loans in reverse and given that the individual or the annuitant pays an annuity company a set amount of money and the company pays back the amount to the individual with interest over time.
How Joint Annuity Works
Typically the annuity purchased by the annuitant to be paid for the rest of his lifetime after his retirement. But, riders may be attached to annuity for including a survivor annuitant or a joint annuitant. The joint annuitant gets payments from the annuity after the primary annuitant dies. Some choices for the joint annuity are mentioned below:
- Joint & Survivor life annuity reducing on the First or the Either death: Full payments are given until both the joint and the primary annuitant are alive.
- Joint and Survivor life annuity with certain period: Full payments are paid as long as the primary or joint annuitant lives. After death of either annuitant the payments get reduced. However if the death happens during a pre-decided period of time, full payments are paid to the survivor until the amount of time is expired. Once, that particular period of time is finished, reduced payments are given to the existing annuitant.
- Joint & Survivor life annuity reducing on death of the primary annuitant: Level payment is paid for the term of pre-decided period of time as mentioned in the contract; but the primary annuitant should be alive. On death of joint annuitant, payments do not get reduced. But, if the primary annuitant dies, the payments to joint annuitant get reduced.
- Joint & Survivor life annuity with Installment Refund: Any Joint and Survivor life annuity can have an installment refund. In an installment refund payments are typically reduced if both the primary annuitant and the joint annuitant expire prior to the premium gets repaid. The rest amount of premiums is given to beneficiary in the level annuity installments.
- Joint & Survivor life annuity with Cash Refund: This is almost same as Joint & Survivor life annuity with Installment Refund. However, in Joint & Survivor life annuity with cash refund, the beneficiary gets the rest of the premiums at a time; instead of getting in installments.
- Adding a certain period to the joint annuity: It allows beneficiary to get the full credit as well as payments for the rest amount of premium; but both the primary annuitant and the joint annuitant should die prior to the certain period is passed.