Deferred Income Annuities
There’s not one DIA carrier that is better than the other. The best DIA is the one that provides you the highest contractual guarantee after quoting all carriers. It’s that simple and should be viewed just as if you were buying a plane ticket. You punch in your specific information to get the best deal.
Below are some key benefits that Deferred Income Annuities (DIAs) contractually provide:
Deferred Income Annuities (DIAs) are also referred to as “Longevity Annuities” or “Longevity Insurance” because it contractually solves for the fear that you could run out of money. Annuities are the only product type that can guarantee a lifetime income stream, regardless of how long you live. Income for life (i.e. guaranteed income) is what DIAs contractually solve for, and need to be considered for your retirement savings, retirement accounts, and retirement plans.
DIAs are tax-deferred long term pension products where you can choose the retirement income starting date at the time of application. DIAs are issued by a life insurance company, and the lifetime monthly payments are primarily based on your life expectancy (or joint life expectancies) at the time income starts. Interest rates (i.e. fixed rates) play a secondary pricing role.
A DIA is a fixed annuity, in essence, the same structure as a Single Premium Immediate Annuity (SPIA). The only difference is the start date of the income payment stream. With a SPIA, income can start as soon as 30 days from the policy issue date and defer for a period of time of up to 1 year. With a DIA, income can start as soon as 13 months from the policy issue date and can be deferred as far out as 30 to 40 years with some carriers. Both are a simplistic transfer of risk strategies that contractually solve for income for the rest of your life.
Deferred Income Annuities (DIAs) have a sister product called Qualified Longevity Annuity Contract (QLAC). It’s the same deferred annuity structure, but QLACs can only be used in a Traditional IRA and some employer-sponsored retirement plans. QLACs also have specific funding rules as well.
DIAs can be used in all account types and can be contractually structured so that any unused money will go to the listed beneficiary(s) as a death benefit. In other words, the DIA carrier is on the hook to pay regardless of how long you live, but will never keep a penny under any circumstance.
Squash the fear of outliving your money with Deferred Income Annuities
COLAs (Cost of Living Adjustment) increases can be contractually added to your DIA policy at the time of application. COLAs increase your income stream on an annual basis by the percentage that you choose. That sounds fantastic on the surface, but annuity companies have big buildings for a reason. They don’t give anything away. When you add a COLA increase to your DIA income stream, the annuity company significantly lowers your initial payment amount when compared to the same DIA without a COLA.
DIAs are typically funded with a lump sum, and can also be quoted with a reverse-engineered approach to contractually solve for a specific monthly income amount. Before you buy a longevity annuity (DIA), you need to understand that it works similar to your Social Security. The older you are when the income starts, the higher the payment (i.e. rate of return) because your life expectancy is less. The younger you are when the income starts, the lower the payment because your life expectancy is more. If you haven’t figured it out by now, every U.S. working citizen already owns an annuity. It’s a DIA structure called Social Security.
Before you buy a Deferred Income Annuity (DIA), you need to have us run quotes on our proprietary annuity calculators to find the highest contractual guarantees for your specific situation. You also need to schedule a time to speak with “America’s Annuity Agent,” Stan The Annuity Man®...the top annuity expert in the country.