What is a common life with the last survivor’s pension?
Living together with the last survivor pension is an insurance product that provides lifetime income to both partners in a marriage.
It can also allow payments to a third party or designated beneficiary even after the death of one of the spouses or partners. In addition to providing income that cannot be survived – essentially longevity insurance – it can also be used as a way to leave a financial legacy for a beneficiary or charitable cause.
Living together with the last survivor’s pension can also be called joint survivor’s pension.
Understanding common life with the last survivor’s pension
Living together with the last survivor’s pension is by definition not certain. Payments continue until the death of the two marriage partners. Typically, after the death of a partner, the survivor receives a lower payment. The exact amounts to be paid are specified in the contract.
It is also possible for an annuitant to designate a beneficiary, who may or may not be the same person as the designated third party. This third party would receive a payment triggered by the death of one of the spouses.
For example, a couple could have a life in common with the last survivor pension that pays a monthly benefit of $ 2,000. After the death of a spouse, half of this $ 2,000 can be reallocated to a third party beneficiary, such as a child, for the life of the remaining spouse.
As such, living together with the last survivor’s pension can be used as a component of estate planning.
Who are they suitable for?
Living together with the last survivor’s pension is intended for married couples who wish a surviving party to continue receiving benefits until the death of the two persons. Annuity buyers, in this case, will have to decide how much the surviving spouse will need financially.
Current options include payments at 100% of the original benefit, 75%, 66 2/3% or 50%. Since the cost of living for a surviving spouse is usually more than half the cost of living for two people, many financial advisers and planners choose an income greater than 50%.
It should be noted that lower payments generally mean a higher death benefit. Of course, if there are other sources of retirement income, a 50% payment may be sufficient.