Shopping for Lifetime Income Benefits
All lifetime income benefits are not created equal, so shop around – with the help of a qualified financial professional you trust. The process involves three steps:
Step 3: Evaluate the Insurance Company
- The income-for-life guarantee on which lifetime income benefits are built is only as strong as the insurance company offering it. So for peace of mind, don’t settle for less than a highly rated insurance company. That credit rating speaks to its claims-paying ability and its overall financial strength. A quick visit to AnnuityFYI will get you updated side-by-side insurance company ratings from the four major ratings agencies.
- Look for an insurance company with strong management and customer service, along with simple, transparent account access, management and reporting.
Three Keys to Maximizing Lifetime Income Benefits
Here are a few things analysts have discovered about the value of lifetime income benefits*:
- The younger the age at which the lifetime income benefit is purchased, the more valuable the withdrawal guarantee (except in designs where the roll-up ceases at a particular future date).
- The sooner withdrawals begin, the less valuable the withdrawal guarantee.
- A higher payout rate will result in higher cash equivalent annual return on the investment (since the monthly income guarantee would be higher).
*”Measuring the Value of a Guaranteed Lifetime Withdrawal Benefit,” Garth Bernard, Journal of Financial Service Professionals, March 2010.