New Variable Annuities Offer A Deferred Income Annuity Rider

Deferred income annuities have been increasing in popularity and sales over the past couple of years.  Variable annuities have gone through quite a transition in that same time frame.  While they still hold the majority of annuity sales, variable annuity carriers have scaled back their products and made changes to protect themselves from market tumult.  An interesting new innovation is combining the deferred income annuity and the variable annuity to offer clients multiple benefits in just one annuity product.  According to Life Health Pro’s “Transition into retirement seamlessly with combo DIA-variable annuity,” this new product structures the deferred income annuity as a rider within the variable annuity contract.  Clients are able to take advantage of gains in the markets, but can also have confidence that they will have significant income late into their retirement years.

The goal of this combination annuity product is to provide you with more flexibility in your investments.  You have to choose the deferred income annuity rider option when you first purchase your variable annuity.  Starting two years into your contract, you can transfer money from the accumulated variable annuity into the deferred income component of your annuity.  Keep in mind that once you start making transfers, you have to choose the start date that you will begin to receive the deferred income payments in the future.  You can delay making the transfers as long as you want and therefore, delay making a decision about your future start date for income payments.  These products are very flexible because your start date can range from two years in the future to as many as forty years in the future.  You can also transfer anywhere from $1,000 to $100,000 into the deferred income portion of your annuity.

A combination deferred income and variable annuity offers you benefits not found elsewhere.  In a traditional variable annuity, around retirement age you start looking for a way to create an income stream and get rid of the investment-like features.  You can certainly make a tax-free 1035 exchange into a deferred income annuity at that time, but it is much simpler if the deferred income annuity is already attached to your variable annuity.  If you haven’t been transferring your variable annuity funds into the deferred income portion of your annuity all along, you can make a lump sum transfer when you are ready.  This product is important for investors because it meets their needs during working years as well as in retirement years.  Combination annuities are not a perfect product, but may be the best product to meet your needs by offering the benefits of both types of annuities included.

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