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An annuity with a joint term will provide a higher monthly benefit compared to one with a single life term, all else equal. True or False?

User Justswim
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Final answer:

An annuity with a joint term does not provide a higher monthly benefit compared to one with a single life term.

Step-by-step explanation:

An annuity with a joint term means that the annuity payments will continue as long as either of the two individuals (the annuitants) is alive. On the other hand, an annuity with a single life term will only provide payments until the death of a single individual. Therefore, in terms of monthly benefits, an annuity with a joint term would not provide a higher monthly benefit compared to one with a single life term because the presence of an additional annuitant reduces the individual monthly benefit amount.

For example, let's say a single life annuity provides a monthly benefit of $1,000. If the annuity is changed to a joint term with the same payout rate, the monthly benefit may decrease to $800 or another amount lower than $1,000 because there are two individuals to consider, both with a potential for a longer lifespan.

User Dyouberg
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