How Do Annuities Work At Death
Do annuities work at death? Are there annuities where if you begin to take income or annuitize and then you suddenly pass away that "the bad insurance company" will keep your principal? If so, under what circumstances?
What that question is referring to is a structure called life only. Let me give you the Southern version of life only. Life only is it you're in your little jet, and it hits the mountain, poof, money goes poof. It's the highest payment you can receive from a life insurance company, an annuity company for a lifetime income stream. But when you die, when your Bentley hits a tree, when your Lamborghini flips, and it explodes, when your little jet hits the mountain, money goes poof, but guess what? You don't have to structure it that way.
That's one of the biggest misconceptions on the annuity planet, and it's a big one that I control. People ask if I've never bought an annuity because the company keeps the money if I die. No. That's not true unless you want it to be true. Unless you want to structure the policy life only. But you can structure it so that the annuity company is on the hook to pay regardless of how long you live and when you die, when you stop breathing, whatever money is left in the account goes in full to the list of beneficiaries of policy and the evil annuity company doesn't keep a penny. The evil annuity company doesn't keep a penny. Are we clear?
The annuity's death benefits come down to the type of annuity you have.
Reasons to Choose Life Only
There are a couple of reasons you choose life only. Let's go to the obvious ones. You hate your kids, your family, you hate everybody in your family. You don't care about beneficiaries. That's the first reason you do life only.
Life only is the highest lifetime income payment. Why? Good question. Because you are shouldering these are shoulders, shouldering some of the risks. You're transferring them to pay for the part’s life for as long as you're breathing; the annuity company will pay. But the risk that you're shouldering is that day two, you walk out, and you go, "Hey, I see you; I’m going to work." Then you turn, and a bus hits you. You're dead; the money goes poof. But you have to know that, if you're dealing with me, Stan, The Annuity Man®. I will explain the severity of life only and why you choose it.
A lot of people I say, I don't care. I hate my kids. I don't care; I hate my family. Fine. If that's you, that's fine. My kids are getting so much life insurance when I die. First of all, if I die, look into it; it could be suspicious. That's the first thing. The second thing, I'd probably do life only because they're set up and they've had enough money from me anyway, and it's about me. You choose life only if you're saying, you know what, I'm tired of everybody getting some of me; it will be about me. That's life only. It's the highest payment. That's what happens when you die with an annuity. You can structure it so that 100 percent of any unused money will go to the list of beneficiaries when you stop breathing.
If it's joint life, when the second person stops breathing, whatever's in the account goes to the list of beneficiaries. A policy and the evil annuity company don’t keep a penny even though they're on the hook to pay for life. The second question, I thought it was a good one, was what happens when someone, you know, with an annuity dies? My mom has an annuity, my dad has an annuity, my wife has an annuity, or my spouse passes away. It depends on how the annuity is structured. It depends on the type of annuity, whether you can continue that as a spouse or if it's a beneficiary. The annuity’s death benefits come down to the type of annuity you have.
By the way, just saying I hate annuities. That's like saying I hate all trucks or I hate all restaurants. There are many different types of annuities. The death benefit is when someone you know dies with an annuity, you will have to call me Stan, The Annuity Man, America's Annuity agent®, where I can walk through what they own. I’ll explain the options to you from a death benefit standpoint.
The next question is about an annuity with no periods like life, only paying you for life as long as you live and breathe. How does the annuity company know if you're passing? Do the checks keep coming until?
The All Knowing
I always say annuity companies had the big buildings because they can project when you're going to die. They're not guessing like a property and casualty company is when a hurricane or a tornado will hit. Annuity companies have departments just for finding out when people die." They are the death department. If I worked at an annuity company, I would want to be a Director of death at the annuity company.
If you're getting these ongoing payments, know it's not going to happen for infinity, and it's not going to slip through the cracks, and someone's not going to find out. They're going to find out. They will because they have the big buildings, and they're not going to pay someone who isn't breathing. It's that simple. To tie up Robert's question in a bow, I think this is an added benefit that only Stan The Annuity Man can provide to society.
Never forget to live in reality, not the dream®, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.