Which Types of Expenses Can Annuities Fund?

Shawn Plummer

CEO, The Annuity Expert

Annuities are one of the best ways to save money for retirement because they allow you to earn interest on your savings while still having access to the funds. But what types of expenses can annuities help fund? That’s a great question.

Annuities Can Be Used To Fund The Following:

Annuity income can be used to pay for:

  • Living expenses like rent, groceries, and utilities
  • Medical bills
  • Educational costs for children
  • Loans
  • Long-term care
  • Life insurance
  • Lotto payments
  • Settlements from a lawsuit
  • A healthy spouse’s living expenses whose spouse is participating in the Medicaid program.
Annuities Can Be Used To Fund Which Of The Following

Living Expenses

Annuities are often used to create a nest egg for use in providing a retirement income now or in the future.

College Savings

Deferred annuities are long-term savings accounts that accumulate tax-deferred without contribution limits. Some programs include sign-on bonuses for premiums paid throughout the years as well as principal protection (fixed and fixed index annuities). A parent or grandparent can use these savings plans to safely grow and withdraw to pay for their child or grandchild’s college tuition or loans.

An Agent Selling Variable Annuities Must Be Registered With

Long-Term Care

A long-term care annuity is a hybrid annuity designed to help pay for long-term care expenses without jeopardizing retirement funds. To create a tax-free long-term care insurance benefit, an LTC annuity doubles or triples the investment (based on medical records).

Life Insurance

Utilize income from an annuity to fund life insurance premiums while earning interest. Annuitize a contract to put the payments on auto-pilot.

Lotto Payments

The 30-year payout option is paid to the lottery winner via a period certain annuity.


Structured settlements are a type of income annuity that pays a series of payments based on a pre-determined timeline.

Annuities Can Be Used To Fund


Medicaid annuities protect retirees from becoming completely poor and take advantage of their state’s Medicaid program at the same time.

When Can You Withdraw From A 401K

Frequently Asked Questions

Annuities can be used to fund which of the following?

The funds accumulated inside an annuity can be used to fund all or part of a consumer’s retirement income. The accumulated funds can be used to purchase a settlement option that can provide for a lifetime income stream or an income stream that can end prior to the annuitant’s death.

Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed insurance agent and annuity broker with over a decade of first-hand experience. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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