Most people are familiar with the concept of life insurance; you purchase a policy, and the insurance company will pay a death benefit to your family (or another beneficiary) if you die while covered. The concept of longevity insurance may be a bit more unfamiliar.
Symetra Life Insurance Company hopes to change that. The company recently released a new product called the Symetra Freedom Income Annuity, which the company states acts like longevity insurance. The idea is to purchase the annuity at today’s premiums to insure you do not outlive your retirement savings.
For example, a 65-year old could purchase a policy today that will begin regular monthly payments at a specific age, say 85. For a monthly benefit of $2,500, the premium would be about $30,000 today. The premium would be significantly higher if the policy were purchased at age 85.
This new product from Symetra is called a single premium deferred annuity (SPDA). It is not a new product to the industry and longevity insurance is not an insurance product at all. It’s simply a unique way of looking at the benefits provided by this type of annuity.