Retirement Planning

7 Common Annuity Payment Options You Should Know

If you're considering an annuity, here's an outline of some of the different ways you can have it pay out. We've tried to simplify this list to help you sort through your options.

Annuity Payment Options

Annuities can be effective tools to generate a steady income stream in retirement - accumulating earnings on a tax-deferred annuity until you're ready to make withdrawals. Unfortunately, many people don't fully understand the different options available during the payout (or annuitization). To help, we've listed some of the most common annuity payouts.*


Life-only provides you with regular, guaranteed income payments from your annuity for life. By converting the contract value of your annuity, you essentially eliminate the risk that this income source will run out before you die.

Joint and Survivor

Joint and survivor life ensures the retirement income provided by your annuity will continue for your spouse when you die. However, payments are calculated and based on the life expectancy of both you and your spouse, making payments for the joint-life option lower than with the life-only option.

Fixed period

Fixed period (or period certain) is an option that allows you to select a specific time period for which your annuity payments will last. Because you won't be receiving payments for life (as with the life option), payments are higher, but you run the risk that your annuity payments will run out before you die. For example, if you're age 65 and select 15-year period certain payout, your annuity contract will guarantee payments until you reach age 80. So if you live longer than 80 and don't have any other source of retirement income, you might find this option too risky. 

Life with period certain

Life with period certain (or guaranteed term) provides you with guaranteed income for life (just like the life option), but also allows you to select a specific time period for which your annuity must pay your designated contingent payee even if you die before that guaranteed period ends. While this option provides you with income for life, payments are generally smaller than they would be under the life-only payout.

Fixed amount

Fixed amount (or systematic withdrawal schedule) allows you to select the amount of the payment you want to receive each month. The payments continue until the total accumulated value has been paid out. The duration of payments will depend both on the amount chosen and the annuity's accumulated value at the time of annuitization.  For this reason, the insurance company cannot guarantee that you will not outlive your income payments. 

Lump-sum payment

Lump-sum payment allows you to receive your annuity payout in one lump sum. However, in the year you take the lump sum you'll have to pay income taxes on the entire investment-gain portion of your annuity. For some qualified accounts the entire sum may be taxable. Be sure to consult a qualified tax professional or financial advisor before taking a lump sum from an annuity.

Selecting the best annuitization payout for your annuity can be confusing. Begin by deciding on the amount you will need each month to live on or to supplement your retirement and how long you think you'll need to receive payments; then meet with a qualified insurance agent or financial planner to determine the option that's best for you.

*Not all annuities provide these options, and some may offer different payouts. All guarantees are subject to the claims-paying ability of the issuing insurance company.

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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries. Variable annuities are long-term investments intended for retirement planning and involve market risk and the possible loss of principal. Investments in variable annuities are subject to fees and charges from the insurance company and the investment managers.

Protective and Protective Life refer to Protective Life Insurance Company (PLICO) and its affiliates, including Protective Life & Annuity Insurance Company (PLAICO). Variable annuities are issued by PLICO in all states except New York and in New York by PLAICO; securities offered by Investment Distributors, Inc. (IDI) the principal underwriter for registered products issued by PLICO and PLAICO, its affiliates. All companies are located in Birmingham, AL. Each company is solely responsible for the financial obligations accruing under the products it issues. Product guarantees are backed by the financial strength and claims-paying ability of the issuing company. Policy form numbers, product availability and product features may vary by state.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax‐related decisions. For information about Protective Life and its products and services, visit

Investors should carefully consider the investment objectives, risks, charges and expenses of a variable annuity, any optional protected lifetime income benefit and the underlying investment options before investing. This and other information is contained in the prospectus for a variable annuity and its underlying investment options. Investors should read the prospectus carefully before investing. Prospectuses may be obtained by calling PLICO or PLAICO at 888.340.3428.