What is the payment frequency for a life annuity?

The payment frequency for a life annuity is generally structured as a series of regular payments made to the annuitant for as long as they are alive. This arrangement provides the annuitant with a reliable income stream that continues until their death, ensuring that they do not outlive their savings. The amount and frequency of the payments can be customized to some extent, but the key characteristic of a life annuity is that payments are contingent upon the annuitant's longevity.

In this structure, the annuitant receives payments either monthly, quarterly, or annually, depending on the terms specified when the annuity is established. It's essential to note that the life annuity terminates upon the death of the annuitant, meaning that the payments do not continue to a beneficiary after the annuitant's passing, which is a critical distinguishing feature of a life annuity compared to other types of annuities that might provide benefits to beneficiaries.

Understanding this concept helps clarify the purpose and functionality of life annuities in retirement planning, providing financial security by converting a lump sum into a predictable income stream for the duration of the annuitant's life.