Annuity Payout Options
Once you begin receiving payments on your annuity (annuitize it) you cannot change the option you select. It is important to understand the choice you are making to ensure it meets your needs. The different options can result in different payments to you. Allison Harris can work with you to help you make the right choices. Some of the options include:
Lifetime Only - Income payments will last only as long as you live. Insurance companies calculate the payments based on average life expectancies. If you live longer than normal, you will be the winner. If your lifetime is shorter than normal, the insurance company will be the winner. When the annuitant dies, the payments cease, even if all the initial investment has not been paid out.
Lifetime Only With a Specified Years Certain - Regular payments are made for as long as you live or for a certain number of years, whichever is longer. If you die before the specified number of years, then your beneficiary will receive the balance of the payments until the years specified is reached.
Lifetime With Installment Refund - Payments are made for as long as you live. If you die sooner than expected and the payments made do not equal the principal amount, then the balance of the principal is paid to your beneficiary in monthly payments.
Specified Period Certain - Payments are made for a fixed number of years that you select. Typically this ranges from 5 to 25 years. If you don't live for the specified number of years, the remaining payments are made to your beneficiary. When the period of time you specify is over, you stop receiving payments. The drawback is that you may outlive the income stream you've created.
Joint and Survivor - This is based upon two people's lives. Payment is made as long as either person is living. Sometimes this will have an option that reduces the second person's amount by a certain percentage. This can include a specified number of years so that if both pass away before the specified number of years, the beneficiary receives the remaining payments.