For example, a 65-year-old man who invests $100,000 in a traditional life-only annuity would receive $676 a month for the rest of his life, according to New York Life. (A woman's payout would be smaller because of her longer life expectancy.) If the man lives a long time, it's a great deal. But if he dies early, the insurance company keeps the money.

Or he could choose a life annuity with a cash refund so his heirs would receive the balance of his initial investment if he died prematurely. His monthly payout would decrease to $626. If he opted for a life annuity with a 20-year guarantee (meaning his heirs would continue to receive annuity payments for 20 years from the date of purchase if he died before then), his monthly payout would drop to $591.