What Is a Straight Life Annuity?

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A straight life annuity and a straight life insurance policy often get confused, but their respective benefits are very different. So, which one is right for you? In this article, we’ll explain the difference between a straight life annuity and a straight life policy, how to decide which one is best for your family and financial situation, and where to look when you’re ready to buy.


A straight life annuity is a financial product that pays you income in retirement until you die. Unlike a 401(k) or other qualified retirement plan, which can run out of money, a straight life annuity guarantees you’ll always have retirement income. Compared to other types of annuities, it tends to have higher scheduled payouts. After you pass away, the payments stop. There is no death benefit for your spouse, children or heirs.


A straight life insurance policy is another name for whole life insurance. It is a permanent life insurance policy with a guaranteed death benefit. It can be used for retirement income either by taking withdrawals from the policy or by taking tax-free policy loans. Because you’re not paying back the loan, either option will lower the death benefit, but there will likely still be money to pass on to your spouse, children or heirs.


Which is more expensive?

Because straight life annuities don’t offer a death benefit, they are usually less expensive than straight life insurance policies.

Which is best if I have a family?

If your spouse will rely on your retirement income or if you have dependents that will need financial support after you’re gone, a straight life insurance policy provides the death benefit they need. A straight life annuity will not provide any financial support to your spouse or children after you’re gone.

When is the best time to buy a straight life annuity?

Straight life annuities can be purchased in incremental payments during your working years or may be purchased outright closer to retirement. Regardless of when you purchase your annuity, the payout in retirement will be the same.

When is the best time to buy a straight life insurance policy?

Generally, the healthier you are when you apply for a life insurance policy, the better your insurance rating and lower your premium will be. This is why it’s recommended to buy a straight life insurance policy when you’re young. Not only will this lock in a low lifetime premium, it also guarantees your family will be taken care of in case you pass away unexpectedly. And because straight life policies earn a guaranteed rate of return, if you buy young, you’ll have more years for your cash value to grow. 

That said, if you’re approaching retirement or already retired, it’s not too late to buy a straight life insurance policy. If you’re concerned about market volatility and protecting your retirement nest egg, life insurance can act as a volatility buffer and provide retirement income during a market downturn.

I’m ready to buy. Where should I start?

Whether you choose a straight life annuity or a straight life insurance policy, the expert Wealth Strategists at Paradigm Life can help you get started. We work with the nations top providers to find the best annuity or life insurance policy for your financial goals — and our consultations are always free.

Not only do we shop for financial products for you, we also support you during the application process, offer annual reviews to make sure your products are still aligned with your financial goals, and provide free continuing education on wealth strategy. If you’re ready to take control of your financial future and earn retirement income you don’t have to worry about outliving, schedule your complimentary virtual consultation here

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