What Are Contingent Annuities?

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Understanding Contingent Annuities

What is a Contingent Annuity?

A contingent annuity is a unique financial product designed to provide a guaranteed income stream if your investment portfolio falls below a specified value. This type of annuity combines the potential for investment growth with protection against significant market downturns, ensuring financial stability even in volatile markets.

How Contingent Annuities Work

Consider a retiree named Jane who has invested $500,000 in a diversified stock portfolio. Jane purchases a contingent annuity that guarantees an income if her portfolio drops below $400,000. In the event of a market downturn, if her portfolio’s value decreases to $350,000, the annuity activates. This guarantees Jane a steady income, protecting her from the full impact of market losses.

Key Features of Contingent Annuities

  • Investment Portfolio Linkage: Your annuity is directly linked to your investment portfolio, allowing you to benefit from potential growth.
  • Threshold Value: A predetermined portfolio value triggers the annuity to start providing income.
  • Guaranteed Income Stream: Ensures you receive a stable income when your portfolio falls below the threshold.
  • Market Protection: Offers stability in times of market volatility, providing peace of mind.
  • Flexibility: Can be tailored to meet your individual retirement needs and financial goals.
Contingent Annuities

How We Can Help

At The Annuity Expert, we understand that planning for retirement can be challenging, especially when faced with market uncertainties. Our mission is to provide you with the best solutions at the lowest costs, ensuring your financial security and peace of mind.

Understanding Your Concerns

We recognize retirees’ primary concern: securing a stable income despite market fluctuations. This issue can cause stress and anxiety, as the fear of outliving one’s savings becomes more pronounced. Our expertise as an insurance agency, annuity broker, and retirement planner for over 15 years positions us to address these concerns effectively.

Our Commitment to You

We believe in offering personalized solutions that align with your unique financial situation. We stand for providing reliable, cost-effective options that safeguard your retirement income. Our goal is to ensure you enjoy your retirement without the constant worry of financial instability.

More Information On A Contingent Annuity

What We Recommend

Step 1: Free Consultation

The first step is to schedule a free consultation with one of our experts. We’ll discuss your current financial situation, retirement goals, and concerns during this meeting. The main benefit is that you’ll receive personalized advice tailored to your needs.

Step 2: Customized Annuity Plan

Based on the information gathered during the consultation, we’ll develop a customized contingent annuity plan and explain it in detail, highlighting how it will protect your income and provide market protection. This step will help you clearly understand how your annuity works and how it fits into your overall retirement strategy.

Step 3: Implementation and Ongoing Support

Once you’re satisfied with the plan, we’ll assist you in implementing the contingent annuity. Our team will provide ongoing support, monitoring your portfolio and ensuring your annuity continues to meet your needs. The main benefit is the peace of mind knowing your retirement income is secure and protected.

Features and Benefits
  • Guaranteed Income: Provides a stable income stream even during market downturns.
  • Market Protection: Shields your portfolio from significant losses.
  • Flexibility: Tailored to meet your individual needs and goals.
  • Ongoing Support: Continuous monitoring and support to ensure your annuity performs as expected.
Addressing Common Objections

Some may worry about the complexity or cost of contingent annuities. However, our transparent and straightforward approach ensures you understand every aspect of your annuity. We offer competitive pricing to ensure you get the best value for your investment.

Without a contingent annuity, you risk significant financial instability during market downturns, which can erode your retirement savings. By working with us, you’ll experience financial security, peace of mind, and the freedom to enjoy your retirement fully.

For personalized advice and a free quote, contact The Annuity Expert today. Secure your financial future with a contingent annuity designed to protect your income and provide lasting peace of mind.

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Frequently Asked Questions

What type of an annuity is a contingent annuity?

A contingent annuity is a type of deferred annuity, which means that the income payments are received at a future date. It differs from an immediate annuity in that it only begins to provide payments when certain conditions are met, such as when the underlying investments reach a pre-specified level or date. A contingent annuity may also be referred to as a deferred contingent annuity or a conditional annuity.

Are there other types of annuities available?

Yes, there are several other types of annuities available. In addition to immediate and deferred annuities, such as the contingent annuity discussed in this guide, other popular types include variable and fixed-indexed annuities. Variable annuities allow you to invest in a selection of mutual funds, while fixed-indexed annuities are linked to an index such as the S&P 500. Additionally, hybrid annuities combine features from multiple annuities for added flexibility and protection. Speak with a financial advisor to determine which type of annuity best fits your needs.

What are the tax implications of contingent annuities?

The tax implications of contingent annuities vary depending on the type of annuity and the jurisdiction in which it is held. Generally, two types of taxes may apply to a contingent annuity: income tax and capital gains tax. For the former, any income received from an annuity will be subject to taxation, while for the latter, any gains realized from the sale of an annuity will be subject to taxes. Additionally, some jurisdictions may impose additional taxes on annuities such as estate or inheritance tax. It’s important to speak with a financial advisor and/or tax professional to understand the specific regulations applicable in your jurisdiction.

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. 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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