Most People Need Longevity Insurance rather than an Immediate Annuity

An immediate annuity is precisely the sum of two parts. One is a deferred annuity commencing at a specified date, with no death benefit before that date. The remainder, before the deferred annuity commences, is a reverse whole life insurance policy with limited premiums. That reverse policy is effectively one underwritten by the annuitant, with the insurance company as beneficiary—a policy that benefits few retirees. However, the deferred annuity (called “longevity insurance” in the literature) is a valuable component of a retirement portfolio that supplements components that focus on safety and growth.