A look at longevity insurance and how it works

As lifespans grow, longevity insurance is gaining attention as a way for people to guard against the possibility of outliving their money.

Here’s a closer look at the concept.


Longevity insurance is the term used to describe specialized annuities that provide lifetime monthly payments beginning at an advanced age, often 85. Known also as a longevity annuity, deferred fixed-income annuity or advanced-life deferred annuity.


You give an insurer a portion of current savings, commonly a lump sum of $25,000 to $100,000, to buy guaranteed income for the later years of retirement. Some policies carry more flexible terms, such as allowing you to pay $10,000 a year for 10 years, or providing a death benefit for your heirs. But those features increase the cost significantly.

Amounts vary by company and policy. Two examples, from New York Life: A 65-year-old couple who buy $100,000 of longevity insurance could expect to receive about $39,000 a year starting at age 85 until they both die. And a 65-year-old man who invests $100,000 could expect to receive about $70,000 a year at 85.


Protects against the heightened risk of running out of money if you live longer than average.

Removes uncertainty from financial planning by defining the exact time period that savings have to cover.

Costs much less than an annuity that begins payments immediately at retirement.

Quickly pays for itself once you reach the age to start receiving payments, and can pay handsomely if you live past 90.


Under the most basic form of longevity insurance, you and your heirs get nothing if you don’t live long enough to start collecting payments.

You give up access to the money for two decades or more.

Unless the policy carries inflation protection, which would cost more, you risk a loss in the amount’s purchasing power under high inflation.

Your money is at risk if the insurance company goes out of business.


Middle-income or upper-middle income pre-retirees with enough savings to spare a chunk now for the sake of financial security in old age. Those whose family members have lived into their 90s.


Insurers include MetLife, New York Life, Symetra Financial, The Hartford.