Which Annuity Lifetime Income Best Fits Your Life?

There are numerous types of annuities that provide lifetime income. The four primary ones are Single Premium Immediate Annuities, Deferred Income Annuities, Qualified Longevity Annuity Contracts, and Income Riders that are typically attached to either a Variable Annuity or an Indexed Annuity. The base policy might be Variable or Indexed, but the Income Rider is the part that provides the contractual guarantee.

Those four strategies are the core ways to create lifetime income. The distinction is simple. You can choose lifetime income for as long as you are breathing, or you can choose joint lifetime income for as long as you or your spouse, the joint participant, is breathing.

So, how do you find the best one? First of all, there is no best product and no best carrier. The best option is the one that fits your specific situation. It is customized, and it starts with two basic questions.

The Two Questions That Determine Everything

When you book a call with one of my team members, you will have to answer two questions. The first one is, what do you want the money to contractually do? If your answer is lifetime income, great. The second question is, when do you want those contractual guarantees to start? In essence, when do you want the lifetime income to begin? That second question determines which type of annuity fits your situation.

Scenario One: You Want Lifetime Income To Start Immediately

If what you want the money to contractually do is provide lifetime income, and you want that income to start immediately, that leads directly to a Single Premium Immediate Annuity.

Single Premium Immediate Annuities have no moving parts, no annual fees, and no market attachments. They are straight transfer of risk strategies based on your life expectancy or joint life expectancy.

And remember this. You can structure the contract so that 100 percent of any unused money goes to your listed beneficiaries if you die early. It does not have to go to the annuity company.

A lot of people say they do not want an annuity because if they die, the money goes away. That can happen, but only if you set it up that way. Some families are complicated, and some people want that. But you do not have to structure it that way.

You can add a cash refund, an installment refund, a period certain, or a combination so that your family receives any unused funds. The annuity company is still on the hook to pay the lifetime income for as long as you are breathing.

Scenario Two: You Want Income To Start In A Few Years

Let us go back to the two questions:

• What do you want the money to contractually do? Lifetime income.
• When do you want it to start? Three years from now.

Now we are in the deferred world. That leads us to Deferred Income Annuities or to Income Riders.

These are different strategies that both provide lifetime income. And you can go to our site and quote Single Premium Immediate Annuities, Deferred Income Annuities, Qualified Longevity Annuity Contracts, and Income Riders at any time.

All of them will show the exact dollar amount of lifetime income starting in year three based on your answers.

After that, our team can explain the differences between the products, or you can download the Owner’s Manuals I have written for each strategy.

Scenario Three: Income Starting Even Later

If you say you want the income to start in seven years, we are once again comparing Deferred Income Annuities and lifetime Income Riders. We will quote all of those options for you.

But what if you want to use IRA money?

This is where the Qualified Longevity Annuity Contract comes in. A QLAC is used for IRA funds, with rules that change from time to time. The amount you use to purchase a QLAC is not included in your RMD calculation, although that should not be the main reason to buy it. You buy it for future lifetime income. You can also attach your spouse as the joint lifetime income participant for that future income.

There Is No Best Product. There Is Only What Fits You.

I have all these sayings that pop into my head, but here is the one I want you to remember: There is no best annuity. There is no best carrier. There is no best strategy. The best option is the one that matches how you want the income structured and when you want it to start. Once we know that, we quote the specific product type that fits your goal, then we look for the highest contractual guarantees for your situation.

Immediate Annuities, Deferred Income Annuities, and Qualified Longevity Annuity Contracts can all be structured in different ways:

• Life only
• Life with period certain
• Life with cash refund
• Life with installment refund
• Joint life with any of those variations

Income Riders are different. They usually do not offer period-certain structures, but they do include a return of premium feature, so the money you do not use goes to your beneficiaries.

The Bottom Line

Do not be a tater. It is about income later. Forget about the Dow. It is about income now, and in this case, income at the right time for your specific situation. And as always, it all comes back to two questions:

• What do you want the money to contractually do?
• When do you want those contractual guarantees to start?

Your answer to the second question points directly to the correct product type. After that, you schedule a call with my team at The Annuity Man, and we walk you through the quotes. Then we leave you alone to make your decision on your terms and on your timeframe.