By David Blanchett


Some financial advisors and academics underscore the “risk” that an annuitant can lose the entire premium of an income annuity by dying prematurely. While it’s true that certain types of annuities— a single premium immediate annuity (SPIA), for example—have “life only risk,” they represent a mere 3% of total annuity sales. Yet even among SPIAs, roughly 90% of quotes and sales include some type residual benefit guarantee.

Therefore, while “life only risk” exists with a very small percentage of annuities, including SPIAs, it can easily be eliminated, which means that life only risk really isn’t a risk.


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David Blanchett, PhD, CFA, CFP®, is Managing Director and Head of Retirement Research, DC Solutions for PGIM, the global investment management business of Prudential Financial, Inc. In this role he develops research and innovative solutions to help improve retirement outcomes for investors. He is also an Adjunct Professor of Wealth Management at The American College of Financial Services.

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