Other Longevity Annuity Basics
It’s important to know that you can also structure these longevity annuity policies jointly with your spouse. Any “life” contingency that is joint with your spouse means that the lifetime income stream is guaranteed and uninterrupted for both lives, regardless of how long you live. The question that you have to answer is what type of guarantee, if any, you want to attach to the lifetime income guarantee.
Annuity lifetime income streams are primarily based on your life expectancy(ies) at the time you start taking payments. In essence, you are betting with the annuity company that you think that you will live longer than they think you are going to live. And if you do live longer, the insurance carrier is on the hook to pay you regardless of how long you live. That’s a simple definition and the pure value proposition of a longevity annuity.
Longevity annuities can be used in both IRA and non-IRA accounts. Recently, a new version of this product, called a qualified longevity annuity contract (QLAC), was approved by the government for use within 401(k) plans and personal IRAs. In my opinion, this QLAC decision is a game changer for the annuity industry and will signify the demand shift to simplistic and transparent products that consumers can easily understand.