Why Would Someone Buy An Annuity That Matures After Death?

Shawn Plummer

CEO, The Annuity Expert

Are you worried about the financial security of your loved ones after you’ve departed? If so, you’re not alone. What happens to our wealth when we cannot manage it is a universal concern. One potential solution to this is an annuity that matures after death. While this might initially sound puzzling, let’s unravel its intricate web together.

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An Overview of Annuities

An annuity is a financial product typically offered by insurance companies. It’s designed to accept and grow funds from an individual and then, upon annuitization, pay out a stream of payments to the individual later. People often buy annuities to secure a steady income during retirement.

The Concept of Annuities That Mature After Death

What, then, one might ask, is the benefit of an annuity that matures after death? The answer lies in the world of legacy and inheritance. These annuities don’t mature during the holder’s lifetime but provide significant financial benefits to their beneficiaries.

Annuity That Matures After Death

Ensuring Financial Security for Your Loved Ones

The primary reason someone might buy an annuity that matures after death is to ensure that their loved ones are financially secure after they are gone. In addition, this annuity can act as a financial safety net for beneficiaries.

Example: John’s Story

Consider John, a 65-year-old retiree. John has ample savings to support himself, but he’s worried about his wife’s financial future after his demise. So he chooses an annuity that matures after death. Upon his passing, his wife receives a steady income stream from the annuity, reducing her financial worries.

Benefiting From Tax Advantages

Certain annuities that mature after death provide tax advantages. They can be a way to transfer wealth to the next generation tax-efficiently, increasing the value of the estate left behind.

Example: The Smith Family

Take the Smith family. They are financially comfortable and concerned about the severe tax implications on their estate. They opt for an annuity that matures after death. As a result, their children receive a more significant inheritance than they would have if the estate had been subjected to heavy taxation.

Annuity Matures After Death

Adding Flexibility to Estate Planning

These annuities offer flexibility in estate planning. Policyholders can choose the beneficiaries and the payment terms, making it an attractive option for those wishing to have more control over how their assets are distributed.

Example: Susan’s Decision

Susan, a single, successful businesswoman with no children, wants her wealth to support various charities after her death. She chooses an annuity that matures after death, designating her favorite charities as beneficiaries. Knowing that her wealth will support causes close to her heart provides peace of mind.

What Annuities That Mature After Death

Next Steps

Buying an annuity that matures after death may initially sound like an odd financial decision. However, its advantages become evident when viewed through the lens of estate planning and ensuring financial security for loved ones. This financial product offers numerous benefits, from providing a steady income to beneficiaries to tax advantages and increased control over asset distribution. As with any financial decision, one should consult a trusted financial advisor to discuss the specific situation and needs. With proper planning, such annuities can be a significant part of securing your financial legacy.

Annuities That Mature After Death

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Frequently Asked Questions

What are the benefits of buying an annuity that matures after death?

Benefits include providing a steady income to beneficiaries, tax advantages for estate planning, and increased control over asset distribution.

Is it wise to buy an annuity that matures after death?

It can be a wise decision, depending on your specific situation and needs. It is advisable to consult a trusted financial professional to discuss any potential annuities before purchasing.

Are there any risks involved with purchasing an annuity?

Like any investment, certain risks come with annuities. These include the risk of outliving your income, inflation risk, and the risk of a lower-than-expected return. It is always important to consider all potential risks when making financial decisions. Therefore, it is best to consult a trusted advisor who can help you understand the pros and cons of different annuity options.

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

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

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