Longevity Insurance: Deferred Annuities for Age 85+
Author: Ian C. Langtree - Writer/Editor for Disabled World (DW)
Published: 2011/08/24 - Updated: 2026/01/23
Publication Type: Informative
Category Topic: Life Insurance - Related Publications
Page Content: Synopsis - Introduction - Main - Insights, Updates
Synopsis: This information examines longevity insurance, a specialized deferred income annuity designed to address one of retirement's most pressing concerns - outliving savings. The article provides authoritative guidance on how these policies work, explaining that they begin payments only when policyholders reach an advanced age, typically 85, making them distinct from traditional annuities. Written for seniors and people planning retirement, particularly those with disabilities who may face higher healthcare costs, the material breaks down the two main product types, optimal purchase timing, and practical examples showing how a $10,000 investment at age 65 can generate substantially higher monthly income when structured as longevity insurance rather than a standard annuity. The piece serves as a valuable resource for anyone concerned about financial security in their 80s and 90s, offering clear comparisons and expert recommendations on allocating no more than 10-15% of assets to these policies - Disabled World (DW).
- Definition: Longevity Insurance
Longevity insurance, also called a deferred income annuity, is a financial product designed to protect you against the risk of outliving your savings by providing guaranteed income that starts later in life - typically at age 80 or 85. You pay premiums either as a lump sum or over several years when you're younger, and in exchange, the insurance company promises to pay you a fixed monthly income once you reach the specified age, continuing for the rest of your life. The big tradeoff is that if you die before reaching that age, you generally don't get your money back (though some policies offer return-of-premium riders). It's essentially the opposite of traditional life insurance: instead of protecting your family if you die too soon, it protects you if you live longer than expected. The appeal is straightforward - you're buying peace of mind that you won't run out of money in your 80s and 90s, which is becoming a more realistic concern as people live longer and retirement spans stretch to 30 years or more.
Introduction
What is Longevity Insurance? Longevity insurance policies are deferred income annuities that issue payments only when, and if, you hit an advanced age. Outliving ones retirement savings is a financial nightmare that haunts many retirees. That's why a handful of insurers have recently introduced a new type of annuity that caters specifically to that fear.
Main Content
Longevity insurance is designed to pay to the policyholder a benefit if he or she survives to a pre-established future age. While any lifelong life annuity is a longevity insurance in the loose sense, in the stricter sense it is a policy that only pays out from a rather high age, e.g. 85.
The benefit is generally paid in the form of an annuity for the remainder of the individual's life, though alternative benefit forms may be provided depending on the terms of the actual policy. Not many insurance companies currently offer these policies. The most notable are Metropolitan Life Insurance, Symetra Life Insurance Company and Hartford Insurance Companies. The main use of these products is to provide retirees with a manner to hedge economically against living to an age at which they may have diminished financial resources.
Aside from the obvious problem of just not having enough money saved up, longevity risk is probably the number one challenge in planning a retirement. If you do not know how long you are going to live, how can you know how much of your savings you can spend each year
With life expectancies on the rise, millions of people are now facing the challenge of how to support themselves into their 80s, 90s, and even beyond. Longevity insurance is one possible solution as a specialized annuity designed to begin making lifetime income payments to recipients at a trigger date of their choosing.
The odds are rising that more Americans will run out of money in old age. Average longevity is rising dramatically at a time when many older Americans are struggling with damaged retirement accounts, unemployment and rising expenses for healthcare. Last year the financial crisis boosted sales of longevity insurance substantially, as worries about financial stability mounted. This has led more individuals to talk to advisers about options for generating income to last through their lifetimes.
Example:
If you bought a $10,000 deferred fixed-income annuity from an insurance company at age 65, in 20 years that annuity will start paying $137 a month, assuming the investment grows at the minimum guaranteed 3%. But with their basic longevity product that starts income payments at age 85, and has no death benefit or withdrawal options like the annuity, your monthly payout would be $710.
How Long Will You Live?
On average, a 65 year-old man will live more than 17 years; a 65 year-old woman will live another 20 years. But these are averages, meaning the odds of living longer are considerable, and they're rising. For someone reaching the age of 85, living another five to 10 years is normal. See our Life Span Expectancy Chart for average lifespans in different countries.
There are currently two main types of longevity insurance:
The first is a flexible product where individuals can start income anytime after two years from the time of purchase up until age 85. There are death benefits and the insurance can be canceled at any time as long as payments haven't started and the money will be returned with an adjustment for interest rates.
The second is the max, which provides a maximum level of income, but only starts paying out when an individual turns 85. There are no cancellations allowed and no death benefits, but it provides the highest level of income.
When to Buy Longevity Insurance
Most people purchase longevity insurance at or just prior to the time they retire. Figure out how much of your essential expenses you can cover with Social Security, pensions, and other forms of guaranteed income and consider buying coverage for the rest. Experts recommend you use no more than 10 to 15% of your assets to purchase a policy, and leave the rest in your portfolio to provide income until it kicks in. Also, when choosing a product, remember that you are buying income that will not kick in for 20 years or more. In Addition longevity insurance typically has no death benefit and doesn't allow any withdrawals before age 85.
Be sure to speak with a reputable insurance company, or your financial adviser, for more information, facts, and up-to date figures if you are planning on purchasing longevity insurance. No matter what, longevity insurance should be, at best, only a small part of your long-term financial plan.
Insights, Analysis, and Developments
Editorial Note: While longevity insurance can't solve every retirement challenge, it addresses a fundamental fear that keeps many older Americans awake at night - watching their bank balance dwindle as they enter their late 80s and beyond. The trade-offs are real: you're betting on your own survival, surrendering access to a chunk of money for two decades, and giving up death benefits entirely. Yet for those who do reach 85, the payoff can mean the difference between rationing groceries and living with dignity. As life expectancies continue climbing and traditional pensions become relics of another era, these policies represent a pragmatic hedge against a long life becoming a financial burden. The key is treating them as one component of a diversified plan, not a silver bullet - because the best insurance against outliving your money is having multiple streams of income when you need them most - Disabled World (DW).
Author Credentials: Ian is the founder and Editor-in-Chief of Disabled World, a leading resource for news and information on disability issues. With a global perspective shaped by years of travel and lived experience, Ian is a committed proponent of the Social Model of Disability-a transformative framework developed by disabled activists in the 1970s that emphasizes dismantling societal barriers rather than focusing solely on individual impairments. His work reflects a deep commitment to disability rights, accessibility, and social inclusion. To learn more about Ian's background, expertise, and accomplishments, visit his full biography.