Not all annuities have a lifetime income guarantee, but many annuities do offer the benefit of lifetime income. If lifetime income is on your financial list of must-haves, there are a lot of life annuities from which to choose. Life annuities are all issued by insurance companies. They offer insurance that you will never outlive your retirement savings. In “Annuity is designed to guarantee income for life,” Mr. Ryan of the Cincinnati Enquirer tells us how these lifetime income guarantees work. Annuities are different from other investments because most annuities guarantee that you will receive income payments over your entire life, not simply until the money runs out. Not only is the government starting to support using annuities in your financial planning, a lot of the private sector is recommending them as well.
Life insurance companies offer life annuities by pooling clients together. They have an in-depth process for determining life expectancies when offering annuity contracts. Some people live to life expectancy, some live much longer, and some people die well before their life expectancy. This is how annuities function. Naysayers will say that you lost out if you happened to be one of the people who didn’t live to their full life expectancy. But this is an invalid argument for two reasons. Using an annuity for insurance against outliving your savings means that you did get it’s full use, even if you died before getting a great deal. And once you have passed, that great deal just doesn’t matter to you anymore. The annuity served its insurance purpose.
If you just can’t wrap your mind around using an annuity strictly for insurance, you can make sure that your money isn’t lost if you die right after purchasing your annuity product. You can add a spouse or another second person to an annuity so that it pays out a joint life guarantee. The annuity will pay out over two people’s lifetimes. You can also add death benefits to a one or two person annuity to guarantee that some or all of your original payment goes to your heirs after you pass. Payments can be set to continue for 10, 15, 20, or even 30 years with some annuities. The more you add onto any lifetime annuity guarantee, the more it costs. You can choose to pay up front for a guarantee like death benefits or period certain payments or you can choose to receive lower income payments in exchange for the added guarantees. No matter your goals, there is an annuity with a lifetime income guarantee that can work for you.
Written by Rachel Summit