Annuities: making sure you don’t
outlive your money.
With people living longer, you may worry that you’ll last
longer than your money does. Annuities provide a steady stream
of income to you as long as you live, or for a definite period
of time if you prefer. Annuities help you turn your savings or
a lump sum such as an inheritance into income. We provide annuities
to individuals living in New Hampshire, Maine and Massachusetts.
- What kinds of annuities are there? What are the differences?
- Why should you consider an annuity?
- What is an impaired risk annuity?
1. What kinds of annuities are there?
What are the differences?
There are different types of annuities for different purposes.
Deferred annuities require many payments over a period of years
before returning income payments to you. Immediate annuities take
a large lump sum of cash—perhaps from an inheritance or
life insurance payment—and turn it into an immediate income
stream. You can design your annuity to guarantee payments for
a certain number of years or your lifetime. You can also have
payments continue to your spouse after your death.
Fixed annuities guarantee the payment amounts and are the most
secure. Equity-indexed annuities have a guaranteed minimum rate
of return with the potential of higher payments if investments
to which the annuity is pegged show gains. So equity-indexed annuities
have a better potential to keep up with inflation increases, if
you want to ensure that. Variable annuities, which have an investment
element, are only sold by investment advisors licensed to sell
securities (we are not).
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2. Why should you consider an annuity?
If you want a secure income stream, you should look into annuities.
We represent many different companies and have many choices. Choose
carefully, and pay close attention to the quality of the insurance
company that you choose. There are costs associated with annuities
and you must consider these too.
Annuities are not the best choice for everyone. If you would
like to discuss your situation with a financial advisor but do
not have one, we can help you find one as we are familiar with
other reputable and experienced local professionals.
If you already have an annuity but feel you may want to change
to a different one, please contact
us. You should be able to change annuities without immediate
tax consequences, though you must check whether you are liable
for surrender charges on the original annuity.
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3. What is an impaired risk annuity?
An impaired risk annuity may be a good choice if you or a loved
one has health problems, may need many years of long-term care,
and you’re worried that you’ll run out of money. Impaired
risk annuities are unlike most annuities, in that the worse your
health, the less it will cost. For example, if your father has
Alzheimer’s Disease, you may be concerned that he’ll
need money so he can have good care choices, and your mother will
continue to need money for her ongoing expenses. People in this
situation can easily go through hundreds of thousands of dollars
over a period of years.
If you apply for an impaired risk annuity, you can design exactly
how much money you want to receive monthly, whether that increases
over time for inflation, and whether there will be a refund of
any of the lump sum used to set it up. The insurance company will
assess your medical condition. It will cost less to purchase this
annuity than a regular immediate annuity, because it’s expected
that you won’t live as long as someone your age in better
health.
For other information on long-term care options, see long-term
care pages on this website or contact
us.
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