Annuity settlement options are the contractual choices for how an annuityTMs value will be paid out upon maturity, annuitization, or death. Standard settlement options include life-only, life with period certain, joint and survivor, period certain only, and lump sum. Some contracts also allow installment refunds or combinations of life and period-certain guarantees. Settlement options determine the balance between maximizing lifetime income, preserving assets for heirs, and providing flexibility. Once a settlement option is elected and annuitization occurs, it is often irrevocable for that contract, making the choice consequential.

Advisors review annuity settlement options when contracts reach their maturity dates, when clients are ready to transition into income, or when beneficiaries claim death benefits. They illustrate how different options change payment amounts and the risk of "dying too soon" versus outliving assets. Advisors also examine default settlement provisions to ensure clients and heirs are not surprised by automatic lump sums or suboptimal payout structures. In advanced planning, settlement options may be coordinated with trust provisions or spousal support arrangements. Understanding annuity settlement options equips advisors to guide clients and beneficiaries through critical, often once-in-a-lifetime payout decisions.