Single Life Annuity

A single life annuity, also called a straight-life or life-only annuity, is a payout structure that pays a fixed periodic amount for as long as one specified person is alive and makes no further payments once that person dies, regardless of how soon after payments began.

Because the insurer, or the pension plan, is on the hook only until one specific death, a single life annuity carries the least mortality risk of any standard payout shape and therefore pays the largest amount per dollar of premium invested, or, in a pension, the largest monthly benefit for a given accrued value. The trade-off is total and immediate: die the month after payments start, and no further payments go to anyone, including a spouse or the estate.

The choice comes up in two contexts. Bought as an immediate annuity, or as the payout mode a deferred annuity takes after annuitization, a single life annuity is simply the highest-paying option among several an insurer offers.

The more consequential context is a traditional defined benefit pension. There, federal law treats a survivor annuity, not the single-life form, as the default payout for a married participant, a Qualified Joint and Survivor Annuity, or joint-and-survivor annuity. Electing a single life annuity instead requires the participant's spouse to consent in writing, with the consent witnessed by a notary public or a plan representative. That protection exists because a single-life election permanently ends the spouse's income from the plan the moment the participant dies, regardless of how many years of marriage or how much the spouse relied on that income. Which payout form actually fits a particular participant's situation is the broader question covered under pension election.

A hypothetical illustration: a pension administrator quotes a participant three payout choices calculated to have roughly the same actuarial value: a single life annuity of $2,000 a month, or a 100% joint-and-survivor annuity of $1,750 a month that continues at the full amount to a surviving spouse. The single life option pays $250 more each month, about 12.5% more ($250 ÷ $2,000), because the insurer or plan is guaranteeing income for only one lifetime instead of two.

Pros

• Pays the highest monthly amount of the standard payout options, because the insurer or plan is guaranteeing income for only one lifetime.
• Simple to understand: one fixed amount, for one lifetime, no moving parts.

Cons

• Leaves a surviving spouse or partner with no continuing income from that specific pension or annuity.
• Cannot be changed once payments begin; the choice, like the annuitization decision generally, is irrevocable.
• On a pension, choosing it over the default survivor form requires overcoming a legal protection built specifically to prevent that outcome for a spouse.