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What is a Single Life Annuity

What is a Single Life Annuity

In this article, we will discuss the contractual terms of a single life annuity and see how it works. This will help you make an informed decision about them.
Omkar Phatak
While working in the prime of our lives, rarely do we give much thought to retirement plans. However, there comes a point of time in life, when you need to understand that you are not going to work forever and at some point of time you must start your retirement planning. There are many investment options that can provide you with a source of regular income in your retirement years. One of these options, and a highly dependable one, is annuity.


An annuity is an investment with an insurance company whose interest is paid out to the annuitant in fixed installments, according to the terms in the contract. A life annuity is a kind of insurance policy, whereby the annuitant is paid a regular income in his retirement years, after investing money for a fixed period of time. The money invested, may be a lump sum or a fixed amount paid periodically in installments. The money stays invested and interest on it, grows tax deferred. The annuitant starts receiving payouts, only after he or she crosses the age of retirement. There are fixed and variable annuities that differ considerably in their terms and conditions.

A single life annuity is a type, whereby only one individual receives the payouts in his retirement years till his death. After his demise, the payouts do not continue to be offered to any dependents. That is why, a life annuity is known as a type of longevity insurance which pays money like a pension fund in retirement. Immediate annuities are also available, which start paying out interest, immediately past one year of investment.

Terms and Conditions

There are different types of contracts and their terms vary according to the insurance company which offers them. Some contracts have a clause, whereby the payments of the annuity continue to be paid even after the demise of the annuitant. The amount deposited in such an annuity type is tax deferred and the annuitant cannot withdraw a penny out of it until after the age of 59 ½ years.

One crucial point that must be remembered, while opting for single annuities is that payment of interest installments only continues till death of the annuitant. So, if you have dependents or if you are married, a single life annuity is not an option for you. It is ideally suited for single people who have no dependents. A life annuity is one of the most recommended retirement planning investments.

It is one of the most recommended types of investments for single people with no dependents. It can guarantee a regular source of fixed income for any individual in his retirement years. Check out the current annuity rates offered by several insurance companies, before choosing one. Read the fine print and the terms and conditions well, before signing up. Make an extrapolated calculation of your future earnings through the annuity investment, which will help you decide which one would exactly meet your future requirements.