There are basically two types of joint annuities. One provides income benefits only until the first of two or more annuitants� death. The other continues benefit payments until the last of the named annuitants dies.

A joint-life annuity is a contract that provides an income of a specified amount as long as the two or more persons named in the contract live. In other words, the income ceases at the first death among the covered lives. As a result, the coverage is relatively inexpensive.

This contract has a very limited market. It might be appropriate for two persons, elderly sisters, for example, who have an income from a stable source large enough to support one but not both of the sisters. If they can purchase a joint-life annuity in an amount adequate to support one sister without disturbing the other income, the combined income will be adequate for their needs while both sisters are alive. Upon the death of one of the sisters, the income from the original source will meet the survivor�s needs. Such a contract is always sold as a single-premium immediate annuity.

Another use of joint-life annuities is to provide income while a spouse or other caregiver must give custodial care to one of the annuitants. In a few cases parents may dislike their children�s spouses so strongly that they establish a trust payable to the natural child only if he or she survives the resented in-law. A joint-life annuity could provide support until the trust funds become available to the beneficiary.

A joint-and-last-survivor annuity is a far more appealing contract than the joint-life annuity because the income under this form of annuity continues as long as any of two or more persons live. It is ideal for a husband and wife or for families in which there is a permanently disabled dependent child, for example.

For most combinations of ages, the joint-and-last-survivor annuity is the most expensive of all annuity forms. To provide an income of $100 per month on the joint-and-survivor basis to a man and woman both aged 65, for example, requires an accumulation of $18,350. If the man is 65 and the woman 60, a sum of $19,827 is needed to provide $100 per month on the joint-and-survivor basis. Compare those figures to the $14,285 required to provide a life income of $100 per month with no refund feature to only a man aged 65.

The joint-and-survivor annuity can be purchased as a single-premium immediate annuity, in which event the cost will be somewhat higher than the accumulation figures quoted above, or it may be one of the optional forms made available under an annual-premium deferred annuity. A joint-and-survivor annuity may also be made available for the settlement of life insurance and endowment proceeds.

Although a typical contract does not contain a refund feature, most insurance companies offer a contract under which 120 monthly installments are guaranteed, and a few offer 240 guaranteed installments. When so written, if the last survivor dies before the minimum number of payments has been made, the remaining installments will be continued to a contingent beneficiary. As under single-life annuities, the contingent beneficiary may be permitted to take the present value of the remaining installments. When both husband and wife are 65, a life income of $100 per month with 120 guaranteed installments requires an accumulation of $18,560�only $120 more than such an annuity without a refund feature.

In its conventional form the joint-and-survivor annuity continues the same income to the survivor as is payable while both annuitants are alive. A common modification, which reduces the cost, provides that the income to the survivor will be decreased to two-thirds of the original amount on the theory that the survivor does not require as much income as the two annuitants. This contract or option, as the case may be, is called a joint-and-two-thirds annuity. Such a contract written in an original amount of $100 on the lives of a husband and wife, both aged 65, requires an accumulation of slightly more than $15,960. The benefits can be duplicated by placing a single-life immediate annuity in the appropriate amount on each annuitant and a conventional joint-and-survivor annuity on both lives. Thus an immediate annuity on each life for $100 per month and a joint-and-survivor annuity in the amount of $100 per month will provide $300 per month as long as both annuitants live and $200 per month to the survivor.

In a joint-and-one-half annuity the income to the survivor is reduced to one-half the original amount. This form has not had the popular appeal of the joint-and-two-thirds annuity. The computing capacity at insurance companies makes it possible to design the survivor benefit to be any specified proportion of the predeath benefit. Consequently many insurers have introduced more than the one-half and two-thirds options.

The joint-and-last-survivor form is widely used by private pension plans to pay the retirement benefits to married plan participants. It is common to provide that where the joint-and-two-thirds annuity has been elected by the employee, the income is to be reduced only if the employee dies first. If the wife or other dependent dies first, the employee continues to receive the full income. Federal law now requires written consent of the nonemployee spouse in order to drop the survivorship benefit.