What is the difference between a joint life annuity and a single life annuity?

An annuity is an insurance product you purchase that provides an income stream during retirement. Some annuities provide payments for a certain number of years. A life annuity provides payments until death.

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A single life annuity is issued for just one person, and payments stop when the purchaser dies. A joint life annuity is issued for two people, usually a husband and wife, and guarantees payments until the second person dies.

There are tradeoffs with each. A joint life annuity provides peace of mind that after one partner dies, the surviving spouse will still receive annuity payments. But a single life annuity generally provides higher monthly payments than a joint life annuity.

Other options

Another possibility is to purchase a single life annuity with survivor benefits. If you die before all the annuity is paid out, a beneficiary – typically your spouse – is paid the remainder of the annuity payments. You pay extra, though, for the survivor benefit feature.

Still another option is to purchase a single life annuity to provide income until your death while also buying whole life insurance and naming your spouse as beneficiary.

Annuities are complicated investment products that can have many moving parts. Be wary of sales pitches. Yes, annuities have advantages, but make sure you understand how they work and consider the question of annuities within the context of your financial life as a whole.

Your best bet is to talk to a trusted financial adviser to help you sort through the various options.

For more, see "How to make sure your cash lasts as long as you do."