Two Main Annuity Strategies
A deferred annuity begins in the accumulation phase and later converts to the payout (annuitization) phase. You may make one or more payments, which grows tax-deferred as long as they remain in the annuity. Earnings are taxed as ordinary income when they are withdrawn from the annuity.
With an immediate annuity, regular payments are generated within a short period of time. Payments can be structured with great flexibility. Typically, an immediate annuity becomes a binding contract once it is funded and cannot be broken. The principal investment is surrendered in return for the promise of a guaranteed income stream paid by the insurance company.
SPIA (Single Premium Immediate Annuity)
An immediate annuity can turn assets into regular payments beginning now and lasting for the rest of an individual’s life or for a specified period of time. Immediate annuities are single-payment annuities paid at contract inception. Any large sum of cash – from an inheritance, legal settlement, sale of a business or home – can be converted into an income stream for the specified duration.
- Allianz Life Insurance Company
- American General
- American National
- Genworth Life of NY
- Great American
- Lincoln Life
- Minnesota Life
- New York Life
- North American
- Reliance Standard
- The Standard
- United of Omaha
- U.S. Life of NY
A Single Premium Immediate Annuities with the “Impaired Risk” (or Rated Age) payout option. Individuals who are deemed impaired risks may qualify for enhanced income payouts, as compared to the non-impaired. The enhanced payout options can be significantly higher.
The term “Impaired Risk” can describe a wide assortment of medical conditions. These conditions, past and present, may have been the result of an accident, disability, or disease etc… The most significant factor is whether the conditions will produce a reduced life expectancy. If so, a lifetime guaranteed payout is projected over a shorter time period; providing a larger payout of the single premium deposited. Equally, this “rated age” could allow for a smaller premium deposit to fund a desired set payout amount. Thus freeing that excess money for other purposes!
- United of Omaha