What does a straight life annuity provide to the annuitant?

A straight life annuity is designed to provide a reliable and consistent source of income to the annuitant for their entire lifetime. This means that the annuitant receives regular payments, typically monthly, for as long as they live, regardless of how long that may be. The primary feature of a straight life annuity is its lifetime benefit; payments cease upon the death of the annuitant, with no residual benefits or payments to heirs or beneficiaries.

This structure ensures that individuals or retirees can budget their expenses more effectively, as they can count on receiving a stable income stream as long as they remain alive. It contrasts with other options that provide different structures of payment, such as lump-sum distributions, fixed-term payouts, or diminishing payments over time, which do not offer the same lifetime security that a straight life annuity provides. By focusing on lifetime income, it addresses the risk of outliving your savings, which is a significant concern for many retirees.