Contingent Annuities

Shawn Plummer

CEO, The Annuity Expert

What is a Contingent Annuity?

A contingent annuity is an insurance product designed to provide retirement income, similar to a standard annuity. The key difference is that a contingent annuity involves the protection of an investment portfolio. If the portfolio’s value drops below a predetermined threshold, the annuity payments kick in, ensuring a steady income stream.

Contingent Annuities

Example of a Contingent Annuity

Imagine Jane, a retiree who invests $500,000 in a diversified stock portfolio. She also purchases a contingent annuity that guarantees a minimum income stream if her portfolio value falls below $400,000. In a market downturn, her portfolio value dips to $350,000. The contingent annuity activates, providing Jane with a consistent income, and protecting her from the full impact of the market loss.

Advantages And Disadvantages Of Contingent Annuities

Key Features of a Contingent Annuity

Investment PortfolioLinked to an individual’s investment portfolio.
Threshold ValuePredetermined portfolio value triggering the annuity.
Income StreamGuaranteed income when the portfolio falls below threshold.
Market ProtectionProvides stability in volatile markets.
FlexibilityCan be tailored to individual retirement needs.
More Information On Contingent Annuities


Contingent annuities offer a unique blend of investment freedom and income security, especially suitable for retirees who wish to protect their income against market volatility. This financial tool can provide peace of mind, ensuring a stable income even during economic downturns. Contact us today for a free quote.

More Information On A Contingent Annuity

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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 types of 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

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, 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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