Annuity Crisis Waivers: What You Need to Know

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

What Are Crisis Waivers?

Insurers’ imposition of surrender charges for withdrawals or surrenders during the surrender charge period is one of the main reasons for a deferred annuity contract’s lack of liquidity.

In the event of a contract owner’s need for long-term care, insurance may mitigate the illiquidity of a deferred annuity by providing crisis exemptions.

If specific criteria are met, the surrender charge for deferred annuity cash value withdrawals is waived during the surrender charge period.

The terms of the crisis exemption vary from one insurance company to another. For example, some companies require a deferred annuity contract that has been in force for at least a year. Others only waive surrender charges if the need for long-term care develops before the contract owner reaches a certain age.

Long-Term Care

In the event of a contract owner’s need for long-term care, crisis waivers that waive surrender charges enhance the liquidity of deferred annuities. In addition, for older individuals or the elderly, who are more likely to need long-term care, deferred annuity contracts with such exemptions are more likely to be appropriate than annuity contracts that don’t have them.

Long-term care crisis waivers allow deferral contract owners needing long-term care to access their annuity cash values without paying surrender charges. They do not pay benefits for the contract owner’s long-term care. A long-term care annuity will pay for such benefits.

Skilled Nursing Home Facility Riders

A skilled nursing facility is a nursing home that provides skilled care for injured, disabled, or sick individuals. Expert nursing services include anything requiring the expertise of a licensed nurse or under their supervision. To be licensed, the facility must employ a registered nurse for at least eight hours each day, seven days a week. Resident medical care must also be given under the supervision of a physician, and there must be a doctor on call to provide emergency medical treatment.

Suppose the contract owner is in a skilled nursing facility. In that case, they may only be exempt from surrender charges for cash value withdrawals taken during the surrender charge period if they have a written agreement with their facility.

Hospice Care Riders

Hospice care is a comprehensive package of services designed to offer patients health and comfort near the end of their lives. Individuals who are terminal but expected to live for six months or less are eligible for hospice care.

If a patient qualifies for hospice, the usage of a hospice rider may only waive surrender charges for cash value withdrawals during the surrender charge period.

Which Annuities Have Crisis Riders

Which Annuities Do Not Have Crisis Riders

Next Steps

If you are nearing retirement and have an annuity, it is important to understand crisis waivers. A waiver will protect your investment if there is a significant financial crisis. However, not all waivers are created equal. You should carefully compare each waiver’s pros and cons before deciding. Contact us for a quote today, and we can help you find the best waiver for your needs!

Crisis Waiver Annuity

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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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