Fixed Annuities

Options for Taking Annuity Payments (Annuitization)

Taking your annuity payments over the payout period is referred to as annuitization. Insurance companies provide a great deal of flexibility in how you can take annuity payments over time. Income payments normally are taken monthly, although other payment modes such as annual may be available. The amount of income you will receive depends on demographic factors such as age and gender, as well as the specific contract features.

When you annuitize, you may choose from the following payout plans:

Life Income

This payout plan includes three basic variations:

1. Life Only

Payments continue during your lifetime and cease when you die. The Life Only plan provides the highest income but offers your estate no protection against an earlier than anticipated death.

2. Certain and Life

Payments are made during a predetermined time frame, called the period certain. If you die before this period expires, your beneficiary receives payments until the end of the period. If you live beyond this time frame, payments will continue until your death. The amount of income you receive with a Certain and Life plan is less than you would receive under the Life Only plan and decreases as the length of the selected certain period increases.

3. Installment Refund

You agree to take a smaller payment amount than you would get with the Life Only variation, but your beneficiary receives the balance of the original fund (if any remains) upon your death.

Fixed Period

With this plan, the company guarantees payments for a fixed number of years. This number is called the years certain and is frequently 10 or 20 years. If you die before the specified number of years, the company pays the remainder of the contract to your beneficiary or estate.

Fixed Amount

With this plan, you receive payments in the amount you choose until the funds are exhausted. If you die before the payment of all funds, the company pays the remaining proceeds to your beneficiary or estate in a lump sum.

Joint and Last Survivor

This plan makes payments as long as the two people named in the policy are alive. When one dies, the amount of the payments may be reduced according to the terms of the contract.

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• Deferred Annuities vs. Immediate Annuities
• Annuity Premiums
• Options for Taking Annuity Payments (Annuitization)
• Annuity Charges and Fees
• How Fixed Annuities Can Be Used to Cover the Long Term Care Risk