American National’s Palladium Single Premium Immediate Annuity Series (SPIA) allows you to convert a lump sum into a steady stream of guaranteed annuity payments, providing a guaranteed income for as long as you need it.
You may want to direct payments from your immediate annuity to a particular need, such as funding long-term care coverage or the special education needs of a family member.
You could also direct the annuity payments to pay insurance premiums, guaranteeing that valuable coverage will be available when you need it.
You could even use the annuity payments to fund a gift to a favorite organization or charity.
Choosing Your Income
American National’s Palladium SPIA will provide a guaranteed income based on a number of choices you make:
- the amount of the premium you pay,
- how long and how often you choose to receive the income,
- additional options available in the annuity, such as a cost of living adjustment, and
- the rate that is in effect at the time you purchase the annuity.
You could choose to purchase an immediate annuity as a way to receive regularly scheduled income payments from a retirement package, investment proceeds, court-awarded benefits, or other lump-sum funds.
You also choose how often you want to receive income payments, whether monthly, quarterly, semiannually, or annually, and whether you want to receive them for a specific period of time or for life.
You can also choose to share the income payments with a spouse or perhaps provide income payments to a spouse after you die.
There are many income options—the choice is yours.
Tax Advantage Income
Spreading taxable income over a number of years through an immediate annuity may also help you manage your tax liability.
If you purchase an annuity with non-qualified funds, meaning that no part of the funds has enjoyed any tax-deferred status and on which you have already paid taxes, a part of the income you would receive from the immediate annuity would be excluded from taxation since it is considered a return of your previously taxed funds.
Cost Of Living Adjustment (COLA)
The Cost of Living Adjustment is an additional option that can be added to most of the available income options at the time of application.
The purpose of the COLA is to allow your SPIA income payments to increase annually alongside increasing costs of living as you age.
Palladium SPIA offers a 3% compounding COLA.
This means that your income payment will automatically increase by 3% each year, compounded annually.
The amount of the initial income received under a payment option with a COLA would be less than a payment option without the COLA.
However, you should consider the value of the income received over the time expected to receive the payments. You may find that the guaranteed increase in the annual income payments is worth the smaller initial payout.
The COLA is not available on the Life with Cash Refund or Life with Installment Refund income options.
Income Options
Period Certain
Receive income payments for a specific number of years, ranging from 5 to 30 years.
If you died before you receive income for the full period you selected, income payments would continue to be paid to your beneficiary for the remainder of the period.
However, your beneficiary may elect, in lieu of continuing to receive income payments, a lump sum death benefit.
The lump-sum death benefit would be equal to the commuted value of the remaining income payments.
Single Life Options
Life Only Income
This income option guarantees that you will receive income for your life.
No minimum number of years is guaranteed.
The income payments cease upon your death.
Life with a Period Certain
This option gives you a guaranteed income for your life, with a further guarantee that the income will at least be paid a certain number of years that you choose, ranging from 5 to 20 years.
If you die before the end of the guarantee period you have chosen, the guaranteed income would be paid to the beneficiary of your choice for the number of years remaining in the guarantee period, or the beneficiary can elect to receive the commuted value.
Joint Life Options
Joint to Survivor
This income option would provide guaranteed income while both annuitants are alive, but upon either annuitant’s death, the survivor would continue to receive a portion of those income payments in the percentage you’ve chosen, such as 50%, 60%, 66.67%, 75%, or even 100%, for the remainder of their life.
Joint to Survivor with Period Certain
This is similar to Joint and Last Survivor, except you also choose a period between 5-20 years as the guarantee period (period certain) for the income payments to be made to either survivor.
Upon the death of either annuitant and after the guarantee period, the income payment would then continue to the surviving annuitant for the specific percentage you chose.
Payments will cease upon the death of the surviving annuitant if the guarantee period has expired.
Joint to Spouse Annuity
With this income option, the payments depend on which spouse dies first.
If the primary spouse dies first, payments will continue to the surviving spouse at 100% of the benefit.
If the secondary spouse dies first, payments will continue to the surviving spouse at 50%, 60%, 66.67%,75%, or 100% (Percentage chosen at issue).
Income payments would cease upon the death of the second spouse.
Joint to Spouse with Period Certain
This is similar to the Joint and Spouse option, except that you would also choose a guarantee period (period certain) between 5-20 years as the time you wish income payments to be made to you or your spouse.
If the primary spouse dies first, payments will continue to the surviving spouse at 100% of the benefit.
If the secondary spouse dies first, payments will continue to the surviving spouse at 50%, 60%, 66.67%,75%, or 100% (Percentage chosen at issue).
Payments will cease upon the death of your spouse if the guarantee period has expired.
Refund Options
Installment Refund
Under this option, guaranteed income would be paid during your lifetime, but if you died before the income paid to you equals the initial premium you paid, income payments would continue to your beneficiary until the amount of the income payments equals the initial premium paid.
Cash Refund
This option is similar to the Installment Refund option, except that if you died before the income paid to you equals the initial premium you paid, the balance would be paid to your beneficiary in a lump sum.
The Cost of Living Adjustment (COLA) is not available with either of the above Refund income options.
American National Life Insurance is also an inexpensive way to leave a death benefit for beneficiaries tax-free.
Unexpected Changes
Although you may purchase the Palladium SPIA for the security of receiving guaranteed income payments, you may find after a period of time that you need a lump sum instead of regular income payments.
If this unexpected cash need arises, the Palladium SPIA has options that may help.
Partial Withdrawal
If only a portion of your annuity funds is needed, you may request a partial withdrawal after your annuity has been in force for three full contract years.
This partial withdrawal is available on all options.
You can request the partial withdrawal, beginning in the fourth contract year, up to 10% of the commuted value without underwriting.
You must withdraw at least $2,000, and a commutation charge will be assessed on the commuted value withdrawn.
Partial withdrawal may not be available in all states.
If you request more than 10% of the commuted value of your annuity, underwriting may be required at the time the withdrawal is requested.
This may affect the calculation of the commuted value.
After you withdraw the funds, the future income payments will be adjusted based on your age at the time of the withdrawal.
You will have to surrender your old annuity contract, and American National will issue a new contract with a new income payment schedule.
New York:
If you elected a life contingent annuity benefit plan, you might request one partial withdrawal over the lifetime of your contract for an amount up to 10% of the contract’s commuted value, reduced by any applicable commutation charge.
Subsequent requests for partial withdrawals are not allowed.
Partial withdrawal is not available in MN, NE, NJ, OR, and WA.
Full Surrender
If you require a large sum, you may need to consider a full surrender of the remaining balance in your annuity.
This option is available to you after your annuity has been in force for three full contract years.
As with a partial withdrawal, a commutation charge will be assessed on the commuted value of your contract, and if your annuity has a Life option, underwriting may be required at the time you request surrender.
This may affect our calculation of the commuted value.
Full surrender is not available in MN, NE, NJ, OR, and WA.
Commuted Value
Commuted Value refers to the present-day value of an annuity after annuity payouts have begun.
All withdrawal and surrender amounts are determined as the present value of future Annuity Payments using our current SPIA pricing rates plus .50%.
The remaining life expectancy and period certain are also considered if underwriting is required at the time the partial withdrawal or full surrender is requested.
A commutation charge is then assessed on the commuted value withdrawn.
Commutation is not available in all states.
Pension-Alternative
If you’re seeking a pension-like income in the future, but want more flexibility, check out an income rider. Annuities with an income rider provide guaranteed income for life with a death benefit for beneficiaries along with much more flexibility, access, growth potential, and control.
