Legal Definitions - continuing annuity

A continuing annuity, also known as a survivorship annuity, is a financial product designed to provide a regular stream of payments that extends beyond the lifetime of the primary recipient. Upon the death of the initial annuitant, the payments continue to a designated secondary beneficiary, often referred to as the survivor, for a specified period or for the remainder of the survivor's life. This arrangement ensures ongoing financial support for the survivor.

• Example 1: Retirement Planning for a Couple

  Scenario: John and Mary are a retired couple. When setting up their pension and annuity plan, they choose an option that provides a monthly income for as long as either of them is alive. John is the primary annuitant.

  Illustration: If John passes away first, the continuing annuity ensures that Mary will continue to receive the agreed-upon monthly payments for the rest of her life. The income stream does not stop with John's death but "continues" to Mary as the designated survivor.

• Example 2: Providing for a Dependent Adult Child

  Scenario: Sarah wants to ensure her adult son, David, who has special needs, will always have a source of income after she is gone. She purchases a continuing annuity where she is the primary annuitant and David is named as the secondary beneficiary.

  Illustration: Should Sarah pass away, the annuity payments, which previously went to her, will then automatically begin to be paid to David. This arrangement provides a continuous financial safety net for David, demonstrating the "continuing" nature of the annuity for the survivor.

• Example 3: Post-Divorce Financial Security

  Scenario: As part of a divorce settlement, Mark is required to provide ongoing financial support to his ex-spouse, Lisa. To guarantee this support continues even if he dies prematurely, Mark sets up a continuing annuity. He is the primary annuitant, and Lisa is the designated survivor.

  Illustration: If Mark were to pass away, the annuity payments would not cease but would continue to be paid directly to Lisa for the agreed-upon term or for her lifetime, fulfilling the terms of the settlement and providing her with uninterrupted financial security as the survivor.