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How to Apply for an Annuity

Stan Haithcock
June 22, 2023
How to Apply for an Annuity

How to apply for an annuity. That's what you're looking to do? Hey, let's slow down there a little bit, sparky. Before you jump to conclusions about buying an annuity, or maybe you're just trying to find out how the process works, which is good, let's look at even if you need an annuity, and we're going to go through those steps, so hang in there with me. And then, I'm going to go through the steps of how to apply and what type of information the companies and carriers will want from you so that they can approve your application and you can get the annuity you want.

All right, so how to apply for an annuity. First thing first, let's see if you even need an annuity, and you might not. But applying for an annuity is similar to going to the bank, applying for a CD, going to a brokerage firm, and opening an account there. You will have to provide that information to the annuity carriers to see if the recommendation or the annuity you're considering is appropriate and suitable for you. The annuity industry is very conscious of that and cares about that. They're not going to take all the money and put it into an annuity; they have to make sure that it's in your best interest, which is a very, very good thing.

Do You Need an Annuity?

But before we even do that, before we even get to that, let's talk about do you need an annuity. I've come up with a couple of things, and they're very easy to understand that will filter out if you even need one. And if so, what type? The first thing is the two questions. Number one, what do you want the money to contractually do? The keyword is contractual, because these are contracts. The second question is, when do you want those contractual guarantees to start? Now from those two answers, I'll then point you to what I've come up with called the PILL. It's not a pill you take; it's an acronym. P stands for principal protection, I stands for income for life, L stands for legacy, and the other L stands for long-term care. Legacy is leaving money to your beneficiary. So, let's do that again. Principal protection, income for life, legacy, and long-term care. You don't need an annuity if you don't need to solve one or more of those.

Annuity Guardrails

Let's say your answer was, "I need a lifetime income stream. I need it to start now." That's under the P part: income for life, principal protection, income for life, legacy, and long-term care. And you answered the two questions. You're going to buy an Immediate annuity, for example. What you're going to do is you're going to book a call with my staff, and they're going to walk you through the application process and ask you typical questions. One question is whether you've ever opened a bank or brokerage account. You're going to have to give some financial information that's confidential. It's not us asking for the information, it's the carriers asking for it. They want to ensure you're not putting too much money into an annuity. And you say, "Really? They're doing that?" Yes, they're doing that. There are guardrails in place so that agents don't put all of Grandma's money into an annuity, which you don't want to happen.

I'm happy that that's in place for the annuity industry. You're going to have to provide that information. That application is going to be filled out, and you're going to sign it, then we'll overnight it to the carrier that you've chosen. They're going to review it. If it's a transfer from an IRA, it'll be a non-taxable event. Or if it's a transfer from an annuity, it'll be a 1035 transfer non-taxable event. Or if you're writing a check, you'll write the check to the annuity carrier, not the agent, the annuity carrier. That check will go in with the application. Typically, it takes anywhere from seven to 14 business days from start to finish to get you your policy. And so, the good news about that is once you get your policy, there's a free look time period. And if you go to, you can look at the free look periods for your state, which means that the policy is enforced, you have it in your hands, it's working, but you have a specific period of time that, for any reason, you can get your money back. And that's a good thing.

Type of Applications

The annuity industry is a bit archaic and is getting up to speed. But when you apply for an annuity, it depends on your chosen carrier. Some have online apps, and some have e-apps. I'll tell you a story, the other day, one of our clients called and said that they wanted to buy two different MYGAs, which are Multi-Year Guarantee Annuities, because they like the rate of the five-year, and they like the rate of the seven-year. I said, "Fine," but one of the carriers was what we call a wet ink application, so they're still using paper, so we had to take the information down over the phone and then overnight the paperwork to the client, they had to sign it, and then we put a prepaid overnight back to us to sign and then to the carrier. But the other carrier was an e-app. We went through the process and sent the secured and encrypted form to the client, they signed, and it was done. And, of course, they returned and said, "Well, why doesn't the other carrier have an e-app?" They will eventually. You know how it is. Companies fall in line as other companies are a little bit more progressive and aggressive with technology. But depending on the carrier, it could be a wet app, real paper, and you got to sign it, or an e-app, an online application. Either way your information is confidential, and the companies are not compiling information on you. Trust me on that one.

Money Limitation

I know you're saying, "No. Yeah, they are." No, they're not. They're really not. They ask for the information on the application to ensure that the annuity you're considering and the money you're looking to put into that specific type of annuity is appropriate and suitable for you. And if there's too much money being put into it, they'll spit the application back and deny it. Trust me on that one. In fact, the other day, I had a client call up and say, "Hey, I have a referral. She's my sister. I need you to talk to her. She needs Immediate Annuity." So, I called the referral, his sister, and she had $150,000 to her name, which is fine. That's a lot of money. Nod your head. Most people don't have that. But that's all she had. She rented an apartment, she wasn't working, but she wanted to buy a $150,000 Immediate Annuity for lifetime income. On the surface, that makes total sense because she needed income in addition to Social Security. But under the guidelines in the annuity world, they would not allow her to put all that money into an Immediate Annuity because that's an irrevocable lifetime income stream. It makes total sense. But she was actually upset with me. She goes, "I want to put all the money in there, and I'm going to find someone to put all of them in." I said, "Well, then find them, but legally they're not going to allow you to put, I'd say, 50 up to 60%, but typically it's about 50% of your investible assets into annuities. Anything above and beyond that, they're going to want to know a reason why. Most likely, they won't approve of you putting in all that money. The annuity companies want to make sure you have enough liquid assets available in case of emergency and just for a living in life."

When you apply for an annuity, my team will take care of everything from start to finish, whether it's a check with the application or if it's a transfer from your IRA to an IRA at the annuity company, or if it's a transfer from your 401k, whatever it is, we take care of it from start to finish, and then we'll keep you updated throughout the process depending on how long that is. Don't hesitate to book a call with us if you have any questions or want to discuss annuities. Thank you for reading this week's Stan The Annuity Man blog, and I will see you next week.

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.

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