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.

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