Frequently Asked Questions

An annuity is a contractual guarantee between you and a life insurance company. That’s an income guarantee for your retirement. When you buy an annuity, you transfer risk from you to that annuity company.

There are only two questions that you need to ask and answer to see if you even need an annuity…and if so, what type.

• What do you want your money to CONTRACTUALLY do?
• When do you want those CONTRACTUAL guarantees to start?

If you don’t need to contractually solve for one or more of the items in the P.I.L.L., then you don’t need an annuity. It’s that simple.

You have your income annuities, which are:

• Single Premium Immediate Annuities
• Deferred Income Annuities
• Qualified Longevity Annuity Contracts
• Income Riders attached to some deferred annuities.

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And then you have principal protection products like:

• Multi-Year Guarantee Annuities
• Fixed Index Annuities.

All annuity contracts are issued by life insurance companies. Most annuity types are classified as fixed annuities, and those are regulated at the state level. 

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The annuity company is on the hook to contractually back up the claims. So you have to make sure that their claims-paying ability and financial strength are sufficient to support the guarantees you are buying. 

Step one of your due diligence is to look at the carriers' balance sheet, ratings, and COMDEX score.

Annuity companies are not allowed to place your money into risky investments. To say the least, the state regulations on that are stringent.

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Fixed annuities are also backed up by State Guaranty Funds. Each state has different rules, but the backing is per-policy, per-owner, per-carrier to a certain dollar amount. State Guaranty Funds are a nice warm blanket to know it’s there, but they should never be compared to FDIC coverage.

50-80 is the most appropriate age for buying an annuity. If you're less than 50 years old, you should never buy an annuity of any type. If you're 80 or above, then we need to talk. Some annuity product types have cutoffs at age 85. That doesn't mean you shouldn’t be buying, but we’ll need to know why you are considering an annuity and what you’re trying to solve contractually.

With theannuityman.com, our minimum is $20,000 to open an annuity account, regardless of the annuity type. But that doesn't mean you need to buy an annuity. It also doesn't mean you need to do the minimum. 

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However, we need to go a bit deeper than that. When we talk one-on-one, we're going to talk about your specific goals and your specific needs and how to solve them contractually.

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In other words, how much money do you need? Our rule about annuity purchasing is: you should use as little amount of money as humanly possible to solve the contractual goal.

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Here's another version of how much money you need. The annuity industry does not want you to put more than 50% of your assets, investible assets, into an annuity or annuities encompassing all types. Can you go a little bit more than that? Yes, we can make a case with the annuity company, but they like to see no more than 50%. That doesn't mean you have to put 50% of what you have in annuities, but once you get up to that line, then we're going to have to have a conversation.

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Our advice is to think about how much money you need, typically from a lifetime income standpoint, when you want the income to start, and how much of that income you need at a specific time.

You can use our calculators, and, most importantly, book a call so we can discuss what works best for your specific situation.

It’s easy! We’ll handle everything for you, from start to finish.

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• Contact us to discuss your specific situation and priorities.
• Review the selected quotes.
• Decide on your terms and timeframe.
• Send us the signed annuity application. 
• Money is applied (check or transfer) to the policy, and the contract is sent to us for review.
• The Annuity Man® sends you the policy via UPS 2nd day air.

Calculating the taxable income on your annuity really comes down to the type of account the annuity is inside. If it's a traditional type IRA, all of the money coming out of that IRA is taxable because you've been deferring. If it's a non-IRA account, you're going to pay taxes on the interest. And if it's a Roth IRA, it's tax-free.

The taxes on your annuity also depends on how you take it out. Read more about how to calculate taxable income here and use our proprietary calculators to run quotes on your own terms and timeframe.

Not all annuity types are transferable. The types of annuities that are not transferable are Single Premium Immediate Annuities(SPIAs), Deferred Income Annuities (DIAs), and Qualified Longevity Annuity Contracts (QLACs). These are all “annuitized” strategies.

If you own an annuity inside of a Traditional IRA, the transfer is from one retirement account IRA to another retirement account IRA. It is a non-taxable event.

Yes, the 1035 exchange rule (a rule under Section 1035 of the Internal Revenue Code) allows you to move from life insurance to an annuity.

Yes, annuity contracts can be gifted, transferred, or inherited. If you’d like to transfer your annuity contract, book a call with us, and we’ll walk you through the process.

Not all inherited annuities are the same. If you inherit an annuity and you want to make a good decision, book a call with us, and we will walk you through all of the choices that are available to you and give you some counsel on maybe which one you should choose based upon your specific situation.

Also, when you inherit money like this, you should always contact your local CPA or tax lawyer and make sure that you're dotting all the I's and crossing all the T's on your estate plan from a tax standpoint from the federal and state level.