Whole Life Annuity Due: Secure Lifelong Income for Australians

Australians face a new retirement reality in 2025: market volatility, longer lifespans, and a superannuation system under scrutiny. Enter the whole life annuity due—an often-overlooked financial product that’s finding fresh relevance as the nation seeks smarter, stress-free ways to secure income for life.

What Is a Whole Life Annuity Due?

A whole life annuity due is a contract with a life insurer that promises you regular, guaranteed payments for the rest of your life. The ‘due’ part means payments start immediately (at the beginning of each period), not after a delay. This is different from an ordinary annuity, which pays at the end of each period. For retirees or anyone wanting predictable cash flow, this distinction matters: you get your money sooner, and your financial planning is simpler.

• Immediate cash flow: Payments begin right after purchase—no waiting for your first payout.
• Lifelong security: Payments continue for as long as you live, eliminating longevity risk.
• Flexible purchase: Funded with a lump sum or, less commonly, a series of contributions.

Why Australians Are Looking at Whole Life Annuities in 2025

The conversation about retirement income has shifted. The 2025 Federal Budget doubled down on retirement income reforms, urging super funds and insurers to innovate beyond the traditional account-based pension. With the Reserve Bank of Australia keeping rates relatively stable but inflation expectations still high, many retirees are seeking certainty over chasing higher returns with riskier assets.

Key 2025 policy updates impacting annuities:

• Retirement Income Covenant: Super funds are now required to offer more tailored income solutions, including annuities, as part of retirement planning.
• Means-testing tweaks: The Government’s recent adjustments to Centrelink Age Pension means-testing rules now treat lifetime annuities more favourably, especially for those worried about outliving their super.
• Tax efficiency: Lifetime annuities continue to enjoy concessional tax treatment, making them attractive for wealth preservation.

Real-world example: Jenny, 67, used $300,000 from her super to buy a whole life annuity due in early 2025. Her first payment arrived within a month, and she now receives $1,200 per month, guaranteed, regardless of market swings. Because her annuity is means-tested under the new rules, her Age Pension eligibility improved.

Benefits, Drawbacks, and Who Should Consider a Whole Life Annuity Due?

Whole life annuity due products aren’t for everyone, but for Australians craving certainty, they offer unique advantages:

• Peace of mind: No matter how long you live, your income keeps coming.
• Budgeting simplicity: Payments are predictable and start right away, helping you plan expenses from day one.
• Protection from market shocks: Annuity payments aren’t affected by share market downturns or property slumps.

Drawbacks include:

• Limited flexibility: Once purchased, your capital is locked in—no withdrawals or lump sums down the track.
• Inflation risk: Unless indexed, your payment’s buying power may erode over time. Some products now offer partial or full CPI-linking, but this often reduces the initial payment.
• Estate planning: Payouts typically stop at death, unless you choose features like guaranteed periods or reversionary benefits (usually at a cost).

Who should consider?

• Retirees seeking a ‘set-and-forget’ income stream
• Those worried about outliving their savings
• Australians with modest super balances who want to maximise Age Pension eligibility

How to Buy and What to Watch Out For

In 2025, Australia’s life insurers and some super funds are expanding their annuity offerings. The process typically involves:

1. Requesting a quote and projection based on your age, investment amount, and preferences (e.g., CPI indexation, reversionary benefits).
2. Comparing product disclosure statements (PDS) and understanding all fees and charges.
3. Checking the provider’s APRA-regulated status for peace of mind.

Watch out for:

• Hidden fees: Ensure you understand any setup or ongoing charges.
• Product features: Some whole life annuities allow for partial capital return or legacy features—these may suit your family’s needs.
• Indexation choices: Weigh the trade-off between a higher initial payment and inflation protection.

Tip: Use ASIC’s MoneySmart annuity calculator to model your income options and see how a whole life annuity due fits into your retirement plan.