How Long Does An Annuity Last?

Shawn Plummer

CEO, The Annuity Expert

How Long Does An Annuity Last

Annuities can last for varying periods depending on the type chosen:

  1. Lifetime Annuities: These provide payments for the entire life of the annuitant. The payments cease upon their death, though some policies may offer options for payments to continue to a beneficiary.
  2. Fixed Period Annuities: These annuities are designed to pay out for a specific period, say 10, 20, or 30 years. The payments are not dependent on the lifespan of the annuitant.
How Long Does An Annuity Last

Maturity Dates for Deferred Annuities

Deferred annuities have a unique aspect called the “maturity date”:

  • Maturity Date: It’s the date when the accumulation phase ends, and the payout phase begins. This can vary based on the annuity contract and can range from a few years to several decades after purchase.
  • Importance: The maturity date is crucial because it determines when you can start receiving payments and may affect the value of those payments.
How Long Does Annuity Last

Fixed Period and Lifetime Annuity Payments

Fixed Period Annuities

  • How They Work: You receive guaranteed payments for a fixed period.
  • Duration: The period can range from a few years to several decades.
  • Suitability: Ideal for individuals who want certainty in the duration of payments.

Lifetime Annuities

  • How They Work: Payments continue for the life of the annuitant.
  • Duration: The payments last until the death of the annuitant.
  • Variations: Some lifetime annuities offer options like joint life, where payments continue to a spouse after the annuitant’s death.
How Long Does An Annuity Last For

Conclusion

Annuities can provide financial security either for a fixed period or for a lifetime. Understanding the differences between fixed period and lifetime annuities, and the concept of maturity dates in deferred annuities, is crucial for making informed decisions.

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How Long Will An Annuity Last

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Frequently Asked Questions

Do fixed and variable annuities last for different periods?

Yes, fixed and variable annuities are available in a range of durations. Fixed annuities typically have longer durations than variable annuities, which can be as short as one year. Choosing an annuity with a longer duration is often considered beneficial for those looking to avoid inflation risk.

Once annuitization happens, can I add more money to my annuity?

No additional money can be added to the policy once an annuity is annuitized. However, some annuities may offer riders that allow more money to be withdrawn from the contract at a given time. Understanding what these riders entail is essential before deciding on an annuity.

Does the question of how long does an annuity last affect surrender charges?

Yes, the duration of an annuity affects surrender charges. Generally, longer-term annuities tend to carry higher surrender charges than shorter-term contracts. Before purchasing an annuity, it is essential to understand the associated surrender charges and how they may impact your finances should you decide to terminate the contract before its maturity date.

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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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