What Does Straight Life Annuity Mean?

The concept refers to a group of insurance contracts whose products ensure that the owner of the policy will get periodic insurance payments until he dies. Upon the annuitant’s death, insurance payments will be brought to an end.

Straight life products do not let annuitants to specify or indicate a beneficiary. They are purchased only with the reason to provide the annuitant with funds during his life. While working, a person can buy such a life annuity in the form of periodic annuity payments, or he may buy the product at once, with a lump sum of money. Usually this latter option is chosen very soon after one retires.

Straight Life Annuity Explained

Due to the fact that straight life annuities do not have beneficiaries to provide payments to after the annuitant dies, they are not so expensive compared to other insurance policies which provide the beneficiaries with payouts.

However, the main disadvantage of this product is that annuitants who purchase them usually make it from their life savings. So should they die, their ‘followers’ will not have any financial support. Moreover, if an annuitant dies very soon after the annuity’s purchase, the amount invested in the product will not be recuperated.