Life Annuities provide a guaranteed income for the rest of your life!
What are Life Annuities?
Life annuities are financial products that provide a guaranteed income stream for a specified period or for the rest of your life, in exchange for a lump sum payment or a series of payments. With a life annuity, you can enjoy peace of mind knowing that you’ll receive regular payments, regardless of market fluctuations or changes in interest rates. Life annuities can be an essential component of your retirement income strategy, helping to supplement other sources of income and ensure a comfortable standard of living in retirement.
How Does a Life Annuity Work?
Life annuities are purchased from an insurance provider. The provider takes this sum and invests it in a portfolio, which then generates income. You then receive your income at a fixed rate.
Annuity Options
Single-Life Annuity
Pays an income to the annuitant for the extent of their life.
Joint-Life Annuity
There are 2 annuitants rather than 1 (usually a spouse or partner). Income is payed out according to policy specifications. When annuitant 1 dies, the policy continues to pay out to annuitant 2.
Term Annuity
Pays an income to the annuitant for the extent of the policy. The buyer determines the policy life at time of purchase.
**Additional options/riders are available and vary between providers.**
Will a Life Annuity fit in my retirement plan?
We can help you understand how a Life Annuity can fit in your retirement. Have a chat with us about your retirement situation and together will can find a solution to achieve a secure income for your golden years!
Wondering what your income could look like? We offer free quotes via our Annuity Form. Fill it out here.
Life Annuity Insurance; Frequently Asked Questions
The insurers quote on the income based on the amount used to purchase the annuity, your sex, age and interest rates in affect at time of purchase are factors that affect the income level. A good broker can generally quote the market rates for the best offer.
An annuity can be bought at anytime, but is generally attained just before retirement.
Yes this is one of the most popular reasons to buy an life annuity. A Guaranteed income for life was typically one of the objectives of the pension plan and the life annuity will accomplish this objective.
Maybe… You should get a quote on an annuity along with multiple other retirement options as this decision is not one you can generally unwind so making the right decision is important. Pension plans, a common alternative, function similarly to the annuity provider and will have to account for the promise or outsource it to the insurer.
All investments can have disadvantage and annuities are no different. The disadvantages can be, a lack of flexibility afterwards, interest rate risk if rates rise after purchase. Opportunity cost with the capital in the future and an zero estate value on death after the guaranteed payment periods end.
Guaranteed income for life, no future investment risk, no need to monitor investment performance, no risk of outliving your income, protection through the insurers. A potentially higher income as the insurer gives an mortality bump to the income when it factors in the mortality gains on its block of business.
Everyone has their own reasons but someone with life shortening medical conditions might rule out this purchase. A hands on investor might not like the lost opportunity to use the capital. Concern for estate value is a primary objective. Periods of high inflation will erode the income value on inflation adjusted comparison.
Likely very easy as this option is one of the core choices you have for these type of funds.
US, Barnett & Associates! We work with multiple providers to provide you with all the options and the best prices. Additionally, we will be more than happy to talk through the pro’s and con’s applicable to your specific situation.