At retirement, annuity income can be structured in a variety of ways, enabling you to
select the income option that best satisfies your unique needs. While you can
surrender an indexed annuity and receive a lump-sum payment equal to the
annuity value, many people elect to convert the annuity value into a stream of
retirement income using one of these income options:
Life Income Option
Payments are made for as long as the annuitant is alive.
Payments cease at the annuitant’s death.
This option produces the maximum guaranteed* lifetime
income.
Life Income with Period Certain Option
Payments are made for as long as the annuitant is alive.
If the annuitant dies before a specified number of payments
have been received (e.g., 120 monthly payments), the
remaining payments in the period certain are made to the
beneficiary.
Life Income with Refund Guarantee Option
Payments are made for as long as the annuitant is alive.
If the annuitant dies before payments equal to all or a
specified portion of the purchase price have been received,
the beneficiary receives the balance of the payments, up to
the refund guarantee* amount.
Joint-and-Survivor Option
This payout option covers two lives.
The same payment can be received for as long as either of
the two annuitants is alive or, alternatively, at the death of
the first annuitant, the payment to the surviving annuitant
can be structured to reduce to a specified percentage (e.g.,
75%) of the payment received while both annuitants were
alive.
A joint-and-survivor payout can also include a period certain
feature.
Period Certain Option (no guarantee of lifetime income)
Payments are made for a specified number of years, such as
10 years or 20 years.
Payments cease at the end of the period certain.
If annuitant dies before receiving all guaranteed* payments,
the beneficiary will receive the remaining payments.
* All guarantees are based on the claims-paying ability of the
issuing company.
Flexibility
While these are the five basic annuity income options, some
annuity contracts offer additional flexibility…ask your licensed
financial adviser about contract features that may add flexibility
to your use of an annuity to provide retirement income.