The Life Annuity

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Understanding Life Annuities

What is a Life Annuity?

A life annuity, often referred to as a pure life annuity or straight life annuity, is a financial product that provides you with guaranteed periodic payments for the rest of your life. In exchange for a lump sum payment or a series of payments, an insurance company ensures you receive a steady income stream. This type of annuity offers financial security by providing a predictable source of income, making it an attractive option for retirees seeking stability.

How Does a Life Annuity Work?

When you purchase a life annuity, you enter into a contract with an insurance company. You can choose to make a single lump sum payment or a series of payments over time. In return, the insurance company guarantees regular payments to you for as long as you live. These payments can be received monthly, quarterly, or annually, depending on the terms of the contract.

Payment Options
  • Single-Life Annuity: Payments are made to the annuitant for their lifetime. Upon the annuitant’s death, the payments cease.
  • Joint-Life Annuity: Payments continue until the death of both annuitants, typically a married couple.
  • Period Certain Annuity: Guarantees payments for a specific period. If the annuitant dies before the end of the period, payments continue to a beneficiary for the remainder of the term.
Benefits of a Life Annuity
  1. Guaranteed Lifetime Income: Ensures you will not outlive your income.
  2. Tax Benefits: Provides tax-deferred growth on your investment.
  3. Financial Security: Offers peace of mind with a predictable income stream.
Drawbacks of a Life Annuity

Lack of Liquidity: Access to the lump sum investment is restricted once purchased.

No Death Benefit: Upon your death, payments stop, and no funds are left for heirs.

Inflation Risk: Payments may lose purchasing power over time if they are not inflation-adjusted.

Who Should Consider a Life Annuity?

A life annuity is ideal for individuals who prioritize financial security and guaranteed income in retirement. It is particularly beneficial for those without dependents, as the lack of a death benefit means no residual payments to heirs.

Choosing the Right Life Annuity

When selecting a life annuity, consider the following factors:

  • Payout Options: Evaluate whether you need a single-life, joint-life, or period certain annuity.
  • Inflation Protection: Look for options that offer inflation-adjusted payments.
  • Financial Strength of the Insurer: Choose a reputable insurance company to ensure the reliability of your income stream.
Life Annuity

How We Can Help

At The Annuity Expert, we understand that planning for a secure retirement can be daunting. For the past 15 years, we have been dedicated to helping individuals like you find the best annuity solutions at the lowest costs. We are an insurance agency, annuity broker, and retirement planner all in one, offering personalized advice and tailored solutions.

You may worry about outliving your savings, coping with inflation, or losing access to your lump sum investment. These concerns can cause significant stress and anxiety, impacting your overall quality of life. We know these challenges well and have the expertise to help you overcome them.

We believe in providing financial stability and peace of mind through careful planning and the best annuity products available. Our mission is to ensure you never have to worry about your income in retirement.

What Is A Life Annuity?

What We Recommend

First Step: Free Consultation

Contact us for a free consultation to discuss your retirement goals and financial situation. This initial conversation helps us understand your needs and identify the best annuity options for you. The main benefit is a clear, personalized roadmap for achieving financial security.

Second Step: Personalized Plan Development

Based on the consultation, we will develop a tailored retirement plan. This plan includes recommendations for specific annuity products that match your needs. During this step, you will receive detailed information on how each option works and how it benefits you. The main benefit is a comprehensive strategy ensuring steady income throughout retirement.

Final Step: Implementation and Ongoing Support

Once you approve the plan, we will assist with the implementation process, ensuring all paperwork is completed accurately and efficiently. We provide ongoing support to adjust your plan as needed, keeping it aligned with your goals. The main benefit is peace of mind, knowing that your financial future is secure and monitored by experts.

Features and Benefits
  • Personalized Advice: Tailored recommendations based on your unique needs.
  • Tax-Deferred Growth: Maximize your investment growth with tax advantages.
  • Guaranteed Income: Reliable, predictable income stream for life.
  • Inflation Protection: Options to safeguard your purchasing power.
  • Expert Support: Continuous guidance and adjustments to your plan.
Addressing Common Objections
  • “I might need access to my money”: We offer options with flexibility and liquidity features to meet your needs.
  • “I’m concerned about inflation”: Our plans include inflation-adjusted annuities to protect your income’s value.
  • “What if I pass away early?”: We provide annuities with period certain options to ensure your beneficiaries are taken care of.

If you choose not to work with us, you risk facing financial insecurity, potential loss of purchasing power, and the stress of managing your retirement funds alone. By partnering with us, you gain financial stability, peace of mind, and a trusted advisor committed to your success.

Imagine the relief and confidence you’ll feel knowing your retirement is secure. Contact us for free advice or a quote today.

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Questions From Our Readers

What is a life annuity benefit?

The primary benefit of a life annuity is the guarantee of a steady income for the remainder of the annuitant’s life. It provides financial security and peace of mind, especially in retirement, as it eliminates the risk of outliving one’s savings.

What does the annuity income for life mean?

Annuity income is the financial return you receive from an annuity, a contract you enter into with an insurance company. Simply put, you make an initial investment (or series of investments), and the company, in return, makes regular income payments to you for a certain period – often for the rest of your life. This is where the term “income for life annuity” comes from.

What is a pure life annuity?

A pure life annuity is a financial product that allows you to invest a lump sum, typically at the time of retirement, with the promise of receiving regular payments for the rest of your life. With its promise of steady income, this option can provide a level of security paramount in the uncertainty of our retirement years.

What is a single-life annuity?

A single-life annuity (SLA) is a type of annuity that pays out to the owner for their lifetime. The payout amount will depend on how much money was invested and when they start taking payments from the SLA.

What age do you draw from an annuity for life income?

Typically, at retirement, but it’s flexible based on your contract.

What is the best age to take annuity lifetime payments?

It depends on your financial situation. However, the day you start retirement is the typical age.

When does a life annuity end?

A life annuity typically ends upon the death of the annuitant, the individual whose life expectancy is used to determine the annuity payments.

What is the current interest rate on an immediate life annuity?

The interest rate on immediate life annuities varies, but as of now, it’s roughly around 1.5%. This rate can fluctuate based on market conditions and the specifics of the annuity contract.

What’s the difference between a joint and 100% survivor annuity and a single life with a 30-year guarantee annuity?

The main difference lies in who receives the benefits and for how long. In a joint and 100% survivor annuity, payments continue for as long as either you or your designated partner (usually a spouse) is alive. Even after one of you passes away, the survivor keeps receiving 100% of the original payment. Once both spouses die, there is no death benefit for beneficiaries. On the other hand, a single life annuity with a 30-year guarantee pays out to you alone for your lifetime. Still, if you pass away before the 30 years are up, the payments will continue to a beneficiary of your choice until the 30-year period ends.

Is a single-life annuity considered a pension?

Yes, a single-life annuity can be seen as a type of pension. When people retire, their pension often provides them with regular payments, and a single-life annuity is one way these payments can be made. With a single-life annuity, the retiree receives payments for their lifetime, but there aren’t any survivor benefits for beneficiaries after they pass away. So, in simple terms, while a single-life annuity is just one choice within a pension plan, it’s still a way for retirees to receive their pension payments.

Why would a single premium immediate annuity with a 10-year certain and life option have a greater monthly payout than a life-only annuity?

Typically, it’s the other way around: a life-only annuity generally offers a higher monthly payout compared to a 10-year certain and life annuity. The reason is risk distribution. In a life-only annuity, payments are made as long as the annuitant is alive, with the risk being if the annuitant passes away early, no further benefits are paid. In contrast, a 10-year certain and life annuity guarantees payments for at least 10 years, even if the annuitant passes away sooner. This added guarantee reduces the risk for the beneficiary but also means the insurer takes on more risk and thus usually offers a lower monthly payment to balance this. If you’re finding a 10-year certain and life annuity offering higher payments than a life-only annuity, it might be due to specific terms of the annuity or unique circumstances of the annuitant.

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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