A lifetime annuity is a financial instrument that can provide you with a fixed stream of retirement income, and it may offer protection against the possibility of outliving your savings. Annuities allow the holder, or annuitant, to make a lump-sum payment or a series of payments in return for regular payments beginning either immediately or at a later point in time. When you secure a lifetime annuity, those payments continue for the remainder of your life.
Depending on your retirement portfolio, a lifetime annuity might be a great option. The professionals at I & E Insurance Agency in Point Pleasant, NJ, can provide information on how a lifetime annuity may fit with your retirement planning. Give us a call today at 732-295-5584 to learn more.
How Do Lifetime Annuities Work?
When you secure a lifetime annuity, you enter into a contract with an insurance company that specifies how the annuity will be structured. Lifetime annuities are funded either by a single payment or a series of payments. This funding period is known as the accumulation phase.
The sum of money provided during the accumulation phase is then converted into a regular income stream that lasts for the remainder of your life. This payout period is known as the distribution phase. The payouts may be distributed on a monthly, quarterly or yearly basis, depending on the annuity’s terms. They may begin soon after securing the annuity (an immediate annuity) or at a later date (a deferred annuity).
Types of Annuities
Different types of annuities can influence how payouts are structured.
- Fixed annuity—This type of annuity provides the annuitant with a set minimum interest rate on contributions and guarantees the payout amount.
- Variable annuity—The payment amounts are connected to the performance of investments of your choice with this type of annuity. Since payouts are tied to the market, the amount of return may vary.
- Indexed annuity—This type of annuity’s payouts are connected to value of a market index, such as the S&P 500. With an indexed annuity, methods to calculate returns may vary from contract to contract, and there may be provisions that protect against losses or limit potential gains.
Get More Information on Annuities
Lifetime annuities can be a complicated financial product with several options. The professionals at I & E Insurance Agency can review the various structures, types, benefits, risks and fees to help you determine if a lifetime annuity fits within your retirement plan. For more information, give us a call or visit our website today.