Are Annuity Death Benefits Tax Free to My Beneficiaries?

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Welcome to Q&A Friday. I am Stan the

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Annuity Man, America's annuity agent,

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licensed in all 50 states. Today's

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question

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is, are annuity death benefits tax-free

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to my listed beneficiaries on the

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policy. So, when I die, my Lejet hits

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the mountain least, of course, my

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Bentley hits the tree, hopefully not

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least, of course.

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When that happens, when I die, does that

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amount left in the annuity type that I

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purchased pass tax-free to the

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beneficiaries? The answer is no. Let me

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give some background a little bit

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because it can be confusing unless I'm

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explaining it because I'm Stan the

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annuity man, America's annuity agent.

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Life insurance companies issue

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annuities. So, wait, you're saying,

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"Wait a minute, Stan. Is it life

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insurance? Aren't those proceeds

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tax-free lumpsum to the beneficiaries?"

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The answer is yes. Pound the table. I

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always say that life insurance is the

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best return on investment you're never

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going to see. Why? Good question. It's

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because you're dead. You're not going to

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see it. But your beneficiaries will love

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you because they're going to get a lump

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sum

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tax-free. If I show up dead unannounced

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in a weird circumstance, then my family

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should be at least interviewed because

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there's a lot of life insurance there.

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They're going to get this lump sum

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tax-free, probate free. It's beautiful.

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Now, life insurance companies issue

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annuities, but that same tax benefit

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that life insurance itself provides is

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not available and does not work and is

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not offered by annuities. And there's

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many different annuity types. single

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premium immediate annuities, deferred

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income annuities, qualified longevity

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annuity contracts, index annuities,

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variable annuities, uh registered index

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linked annuities, RIAS, um all of those

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traditional fix, migas, all we can just

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keep going. There's many different

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types. I love when people hate all new,

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you know, all of those. The death

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benefit is taxable is taxable to the

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listed beneficiaries of the policy if

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that annuity type has a death benefit.

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give you an example that one that does

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not if you said I hate all my

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beneficiaries I just want the highest

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lifetime income payment I want to buy a

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life only immediate annuity that's one

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of 40 ways to structure it then when you

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die money goes poof but in most cases

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the majority of the cases people are

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structuring it so that any unused money

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is going to go 100% to the beneficiary

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now that's going to be a taxable event

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now one last thing and I think this is

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very important never take tax advice

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from someone that's not a CPA, okay, or

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a tax lawyer. Those people are have done

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their work and they are experts in that

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field. So, when you need tax questions,

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if you're a beneficiary of a policy and

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someone passed away and now you're the

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beneficiary, the first person you call

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is not an annuity agent like mwah, you

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call a CPA and a tax lawyer and then

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conference me in at that point in time.

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So, question of the day, are annuity

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death benefits tax-free? The answer is

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no. And I gave you the reason why. My

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name is Stan the Annuity Man. That's Q&A

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Friday. Sees the weekend. Have fun.