Joint Life with Last Survivor Annuity
What it is:
How it works (Example):
A married couple that holds a joint life with last survivor annuity receives a fixed amount of income each month until both spouses have died. This means that the surviving spouse continues to receive annuity payments even after the other has died. Additionally, the couple has the option to arrange for a beneficiary to receive payments following the death of one spouse. In pursuing this option, the monthly income payment is divided between the surviving spouse and the beneficiary. The beneficiary continues to receive payments until the death of the surviving spouse.
For example, suppose Bob and Jane hold a joint life with last survivor annuity that pays them $5,000 each month and have designated their daughter Kate as the third-party beneficiary. Bob and Jane have arranged for Kate to receive $1,000 once one of them dies. Following the death of either Bob or Jane, Kate begins receiving $1,000 each month, and the surviving spouse receives $4,000. Once the surviving spouse dies, Kate stops receiving the payments.