Annuities plans and enrollment
A contract with an insurer that turns a sum of money into a stream of payments, now or later. The contract decides how the balance grows, when payments start, what leaving early costs and what passes to heirs; the analysis reads those terms before anything is signed.
Plans and enrollment questions
Is an annuity an investment?
Legally it is an insurance contract issued by a life insurer, and the fixed and fixed-indexed types we place are regulated by the state insurance departments, not by securities regulators. Variable annuities, which invest in sub-accounts and can lose value, are securities and require a different licence; we do not sell them. Whether an annuity fits alongside your other accounts is a question for your tax or financial advisor, and we will send the contract terms to that person on request.
What happens to the money if I die early?
It depends on the phase and the option. During accumulation, the death benefit, normally the account value or the premium paid less withdrawals, goes to the beneficiary. After annuitization, a life-only option ends at death, a period-certain option pays the remaining certain payments, and a joint option continues for the survivor. Naming a beneficiary keeps the money out of probate; leaving the line blank sends it to the estate.
How is the payout amount decided?
By the sum annuitized, your age, the payout option chosen and the interest rate environment when payments start. Older annuitants and shorter certain periods produce larger monthly amounts. Suppose two people each annuitize $100,000 on the same day; the one who chooses life only will receive a larger monthly payment than the one who chooses life with twenty years certain, because the insurer expects to pay for fewer years.
Can I move an old annuity into a new one?
Yes, through a 1035 exchange that keeps the tax deferral intact. Whether it is wise depends on what the old contract still charges to surrender, what the new one offers and how long a new surrender period would run. Exchanges are the transactions regulators watch most closely, and the analysis is written down so you can see why we did or did not recommend one.
What does the state guaranty association do?
Each state runs an association, funded by licensed insurers, that steps in if an issuing insurer fails, covering annuity values up to a ceiling set by that state. The ceiling is per person per insurer, and the mechanism is a backstop rather than deposit insurance; spreading large sums across insurers is the standard way to stay under it. Arizona, Nevada, Utah and Idaho each set their own figure.
When is the recommendation to do nothing?
When the money is already in a contract with no surrender charge and a competitive floor, when the funds may be needed inside a new surrender window, or when the buyer is looking for growth rather than a floor. An annuity sold to someone who needs liquidity is the wrong product however good the contract; we would rather say so than write it.