Medicare Supplement Store Blog
An annuity is an insurance contract, also considered a retirement plan, that guarantees an income stream after you retire. Most insurees know that this coverage offers an option that ensures a lifetime payment. But did you know that you can also tailor your annuity to take care of your beneficiaries if you pass away?
This article will give information on what can happen to your annuity when you pass away.
The Phase Consideration
Western and Southern Financial group claimed, “In the case of a deferred annuity [...] the timing of death is also an important factor.”
If the annuitant dies during the accumulation or the payment phase, the beneficiary will receive the contract’s equal current value. But, when the annuitant dies during the payout phase, the beneficiary can still receive an amount depending on the additional contract.
Annuity owners choose beneficiaries, either individuals or charities. And, in an unfortunate event for the insured individuals, their beneficiaries have options on how to get benefits.
This type of payout is a one-time distribution of a large amount to the beneficiaries of the deceased. There are pros and cons to this type of payout. It just depends on the lump-sum value and an individual’s financial goals.
This second payout is formally known as the non-qualified stretch provision. It lets the beneficiaries have the distribution on a regular payments basis for the rest of their lives. This type is a better choice for most since it has more potential for a higher value.
The Rule Non-Individual Beneficiaries
There is a five-year rule when the chosen beneficiary falls on the field of estate, trust, or charity. Simply put, the beneficiary must claim the full value within five years of the annuitant’s death. They can opt to choose lump-sum or regular payments.
While there are options as to where your annuity goes after an unfortunate passing, it’s important that you already plan this. Make sure to choose the best type and structure. For most, the best would be the regular payouts since it least affects the tax bill yet has a larger value.
Also, remember that you are the only one allowed to choose your beneficiaries. So, if there’s no one in your contract yet, make sure to coordinate with your advisor. Failing to do so might jeopardize the benefits that your loved ones could have.
At Medicare Supplement Store, we do our best to ensure that our clients are well-protected with affordable and comprehensive policies. We make sure to go the extra mile to help you with your needs. To learn more about how we can help you, please contact our agency at (732) 252-8828 or Click Here to request a free quote. The coverage discussed in this article is not guaranteed. Please call our agents, we are happy to help you learn more about your plan and make sure you have the coverage you need.