insurance

Single Life Annuity

A single life annuity is a retirement income product that provides guaranteed payments for the lifetime of one person only. Payments stop completely when that person dies, making it the highest-paying annuity option since the insurance company only needs to cover one life and has no survivor obligations.

Example

“At age 65, Frank converted his $400,000 401(k) into a single life annuity that guarantees him $2,200 per month for the rest of his life, even if he lives to 100.”

Memory Tip

Remember 'SINGLE and highest JINGLE' - single life annuities pay the highest amount because they only cover one person's lifetime.

Why It Matters

Single life annuities provide the highest possible guaranteed lifetime income from a given amount of money, making them attractive for retirees who don't need to provide for a surviving spouse. However, choosing this option means losing all remaining value when you die, which could leave nothing for heirs.

Common Misconception

Many people think that annuities are always a poor deal because 'the insurance company keeps your money when you die.' While this is true for single life annuities, they're specifically designed to maximize income for people who prioritize their own lifetime security over leaving inheritances, and they pay more precisely because of this trade-off.

In Practice

Mary, 67, has $500,000 in retirement savings and no dependents. A single life immediate annuity would pay her $2,850 monthly for life, totaling $34,200 annually. If she lives 20 more years, she'll receive $684,000 total - much more than her initial investment. However, if she dies after 5 years, she'll have received only $171,000, and her estate gets nothing remaining.

Etymology

From Latin 'annuus' meaning 'yearly,' combined with 'single life' to distinguish it from joint life products that cover multiple people, this term developed with modern retirement planning in the mid-20th century.

Common Misspellings

single life anuitysingle-life annuitysingle life annutiysinge life annuity

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