Prior to annuitization, an annuitant can elect to take a cash surrender or make partial withdrawals from a deferred annuity, subject to contingent deferred sales charges, income taxes and possible penalty taxes.

At annuitization, the annuitant can select from a variety of distribution options, including:

• Life Annuity. Payments are made at designated intervals, such as monthly, during the annuitant's lifetime and cease at the annuitant's death. It is possible for the annuitant to receive only one payment under this option.
• Life Annuity with a Period Certain. Payments are made at designated intervals, such as monthly, during the annuitant's lifetime. If the annuitant dies before a certain number of payments have been made, any remaining payments in the certain period will be paid to the beneficiary. Certain periods of 5 years (60 months) and 10 years (120 months) are typical. For example, if an annuitant receiving $1,000 per month from a 10 year certain life annuity dies after receiving 50 monthly payments, his or her beneficiary will receive the same monthly amount for the remaining 70 monthly payments.
• Installment Refund Life Annuity. Payments are made at designated intervals, such as monthly, during the annuitant's lifetime. If the annuitant dies before receiving total payments equal to the purchase price of the annuity, the remaining payments will be paid to the beneficiary. Let's assume a $100,000 annuity is purchased and the annuitant receives $2,000 per month. If the annuitant dies before receiving 50 payments ($100,000 purchase price divided by $2,000 per month), the beneficiary will receive the remaining payments.
• Joint & Survivor Life Annuity. Payments are made at designated intervals, such as monthly, during the annuitant's lifetime. If, at the annuitant's death, a contingent annuitant is still alive, payments continue until the contingent annuitant's death. It is possible for only one payment to be received under this option, if both the annuitant and contingent annuitant die before receiving the second payment.
• Joint & Survivor Life Annuity with a Period Certain. The same as the Joint and Survivor Life Annuity except that a certain number of payments are guaranteed, such as 10 years' (120 months') worth. If both the annuitant and contingent annuitant die before the guaranteed number of payments is received, the remaining payments will be paid to the beneficiary.
• Specified Period Annuity. Payments are made at designated intervals, such as monthly, for a specified period of time, such as 60 or 120 months, to the annuitant or beneficiary. Since payments cease at the end of the specified period of time, it is possible to outlive this form of annuity.

While other distribution options are available, these are the most commonly used. It is important to understand how these options operate, since the distribution option selected will directly impact the annuity income a client receives. For example, while the Life Annuity option will provide the highest income, it may not be appropriate for a client who has someone else, such as a spouse, dependent on that income.