Annuities

Annuity Rates update April 2012

Immediate Annuity Rates This post will update annuity rates for immediate annuities. First a quick review of immediate annuities and exactly what they do. An immediate annuity is a single deposit by the investor with an insurance company in return for monthly payments for a period of time. That period of time can be anywhere from five years to life. Although I’ve not seen statistics on this, I believe most people take the lifetime option as this is the most attractive feature of immediate annuities. They can act like a second Social Security check, providing a payment for life that you cannot outlive. The first question an investor may have is what are the annuities rates I can get. But this question assumes you can compare the annuity rate to other investments, which you cannot. When investors, economists and accountants analyze an investment, they calculate the internal rate of return. The internal rate of return on an immediate annuities is terrible, about 1% annually. What person in their right mind would make a investment lasting 20 or 30 years at 1%? The annuity rates on immediate annuities will always pale when analyzed against other investments on an internal rate of [...]

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Posted by Bob Richards - April 9, 2012 at 3:11 pm

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Annuity Rates Online 2012

Here are some valuable and useful sources for annuity rates in this post. If you go looking for “annuity rates,” you will come across mostly sites that require you to enter your personal information. You will then get called by 4 insurance people trying to sell you an annuity. Would you like to get current annuity rates and avoid that? Here are sites that show you the annuity quotes without the need to complete any on-line form or get any calls. Note that you need to understand different types of annuities and how they work or else these annuity uotes won’t be of much value to you. You cannot buy directly from the annuity company anyway–almost all annuities must be purchased through an annuity agent. “CD-Type” or “Multi-year Guarantee” Annuity Rates These first sites list what are called “CD Type” annuity rates or “multi-year guarantee” annuity rates. These annuities guarantee a fixed rate for a period of years, typically anywhere from 3 to 10 years. The typical fixed annuity or deferred annuity, that is not of this multi-year guarantee variety, has a rate that changes annually so you never know what you will get after the first year. “CD Type” [...]

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Posted by Bob Richards - May 17, 2011 at 3:45 pm

Categories: annuity rates Tags: 2011, annuity rates, CD type, multi year guarantee

Annuity Rates

Some commenters on the blog have asked about where to find annuity rates. Here are sources for annuity rates: any annuity agent comparative annuity reports (www.comparativeannuityreports.com) Immediate annuity rates http://www.annuityshopper.com/calculators/immediateannuities/ Enjoy. Updated: annuity rates online For agents seeking to expand their annuity business

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Posted by Bob Richards - July 20, 2009 at 8:13 am

Categories: annuity rates Tags: annuity rates

Annuity Safety

What Type of Annuity Is Safe for You? Retirees who want to supplement their Social Security and pension income can look to their savings. They can invest those savings to generate an income or they can annuitize all or part of them. The annuity – as an insurance product – can offer a lifetime income. But are annuities safe? Well, that all depends on what you need to be safe from? Because annuities are insurance products, insurance companies can guarantee a lifetime income. Their vast number of annuity contracts allows mortality statistics to govern predictable payout obligations as a whole. So, these insurance companies need only keep their funding, investments, and finances in good order for the duration of their payout obligation to you for your safety. AM Best and others monitor each company’s ‘financial health’. But companies can potentially fail their obligations – although this possibility is generally low. If you start with annuities that have a safety rating of A+ form AM best and AA from S&P, your annuity safety will be high. Retirees either want to begin annuitization (getting monthly payouts) right away or delaying it until there much older. The latter option is a form of [...]

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Posted by Bob Richards - March 5, 2009 at 10:56 am

Categories: annuity safety Tags: annuity safety

Annuities That Help You Qualify for Medicaid and Protect Your Assets

Long term health care costs remain high and growing. Because of this retirees with significant assets should plan for their potential Medicaid eligibility. A Medicaid qualified annuity can play a part in this planning when one spouse has to enter a nursing home leaving the other one at home. Medicaid picks up the long term care cost of elderly who are impoverished. Long term care is very expensive and can eat up savings fast. The elder may not be able to leave a legacy to their children. Medicaid is a federal program but handled at the local level by your State. State restrictions and regulations on Medicaid vary so you always need to be aware of your own states’ Medicaid policies. Nevertheless, simply giving your assets away and then immediately applying for Medicaid is unacceptable under federal rules . To be safe you need to irrevocably transfer assets 60 months prior to applying. Anything shorter will prompt your state Medicaid office to attribute those assets to you and require you to pay your Medicaid monthly rate (state dependent) until all those assets have been exhausted. Only then will Medicaid foot the bill. If you still have substantial assets, you can [...]

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Posted by Bob Richards - February 27, 2009 at 10:26 am

Categories: fixed annnuities, Medicaid annuity Tags: Medicaid annuity

Creditor Protection and Other Protection of Fixed Annuities

What Protections Does a Fixed Annuity Offer? Asset protection is an important consideration when deciding on retirement investments. One investment of particular interest to retirees is the fixed annuity. Annuities are geared to protect you from running out of income while you’re living. But because a fixed annuity is an insurance product, it has special protections afforded insurance over the years. So, beyond protecting a lifetime income for you let’s, summarize some other protections that a fixed annuity offers you. While you’re living, a fixed annuity offers you 3 protections. They are protection from · Market fluctuations: Because fixed annuities offer guarantee of principal and an interest. You’re protected from the loss in principal and earnings that stock and bond market investments are vulnerable to. · Current taxation of annuity earnings: Since fixed annuity earnings are tax-deferred, they’re not reported on your tax forms. This keeps your fixed annuity investment off your tax records until you withdraw money from them. This affords you a privacy feature. · Lawsuits: Annuities are generally[1] not liable to attachment or garnishment in favor of any creditor of the person insured under the contract,. i.e. annuities offer creditor protection Because your annuity is a contract [...]

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Posted by Bob Richards - February 25, 2009 at 12:14 pm

Categories: creditor protection Tags: creditor protection annuities, prospectmatch

Ladder Annuities for Potentially More Income

If you’re 70 and living off your income from a Certificate of Deposit (CD) you may find it more advantageous to switch to a laddered annuities for more income. Let’s consider how. A $100,000 5yr-CD paying 5% gives you an annual taxable income of $5,000. At a 25% income tax rate, you’re left with $3,500. Of course you’re also left with your $100,000 too. But if you need more income, and you don’t want to get locked into any current income rate, you may consider investing your $100,000 into a set of annuities. Laddering these (i.e. stagger when begins its income stream) allows you to follow income rates if they go up (or down). Laddered Annuities Option We’ll assume you’re 70; and with your $100,000, you buy 5 annuities each for a single premium of $20,000. The first will be a Single Premium Immediate Annuity (SPIA) for a 5 year payout term. The four others will be Single Premium Deferred Annuities (SPDA) geared to produce a payout after 5, 10, 15, and 20 years respectively. Let’s consider what sort of income you’d generate in this case. Refer to the table. These are hypothetical examples and all fees have been ignored (immediate annuities [...]

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Posted by Bob Richards - February 24, 2009 at 5:07 pm

Categories: annuity ladder Tags: ladder annuities, prospectmatch

Revealing your earnings on an Immediate Annuity

Understanding the earnings your money generates for you in an immediate annuity helps your evaluate your investment. A single premium immediate fixed annuity (SPIFA) gives you a fixed monthly payment for the term of the annuity. That term may be a certain number of years or for the remainder of your life. The amount the insurance company will pay you depends on the amount of premium you pay and prevailing interest rates in addition to expenses and your life expectancy if it’s a lifetime payout. Companies will quote you their monthly payout to you but not the interest rate (interest rates on immediate annuities are typically 2%-4%). Nevertheless, since all earnings of the company are dependent on interest-based investments, higher prevailing rates will allow them to make higher monthly payments – and vice versa. Earnings and taxation of your investment What you earn is the excess of payouts over the premium you pay. Every payout is considered part earnings and part return of premium. The fraction of each payout that’s taxable is the ratio of the total excess payout to the premium. To illustrate let’s take a hypothetical example of the payout over a 10 year term certain to illustrate [...]

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Posted by Bob Richards - February 23, 2009 at 9:16 am

Categories: immediate annuity Tags: immediate annnuity

Die Broke

How Do I Organize My Money to Spend My Last Dollar the Day I Die? asked the investor And the advisor said, “That’s no problem, Sir. What day will that be?” Not knowing when we’ll die means making sure we arrange our finances to produce income for as long as we live. Aside from being able to live off just the earnings of our investments, only social security, pensions and annuities can pay you a lifetime income. We would all like to have jut enough money to last until our last day and die broke. While that seems like a wild idea, it’s doable. Social Security gives you a lifetime income because the government can compel taxpayers to pay for it. And, if things get tight, they can print the money necessary to pay you. And it stops the day you die. If you do get a pension, it’s likely being paid by an insurance company in the form of an annuity. As long as the insurance company remains solvent (large companies such as Prudential and New York LIfe lent money to the federal government during the Depression), you receive income for life that stops the day you die. If you like that idea, making [...]

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Posted by Bob Richards - February 4, 2009 at 12:20 pm

Categories: annuitization, immediate annuities Tags: die broke, prospectmatch

Tax Consequences to the Annuity Beneficiary

Annuities are especially attractive to retirees because they assure an income for life. They’re often held as deferred annuities as a back up for those later retirement years as a supplement to other retirement income or when savings become depleted. But many retirees will die before tapping their deferred annuity. What are the tax consequences to the annuity beneficiary and should other options be arranged? A deferred annuity offers a distinct tax-benefit. It’s earning grow tax-deferred. For the same annual return as a taxable investment, a tax-deferred investment compounds faster because none of the earnings are taxed away each year. However those tax-deferred earnings will eventually be taxed upon withdrawal, whether by you or the annuity beneficiary. Your contributions to the annuity, though, will not be taxed. This is the case in ‘nonqualified’ annuities which are funded with after tax contributions. Annuitant’s taxation If a partial withdrawal is made, the IRS presumes that earnings come out first – so that these are completely taxable. But under regular monthly payments – a portion of each payment is not taxed but treated as a return of your nontaxable contributions. An exclusion ratio calculated by the insurance company designates that untaxed portion. When, [...]

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Posted by Bob Richards - January 21, 2009 at 10:22 am

Categories: annuity beneficiary, annuity taxation Tags: annuity beneficary, annuity taxation, prospectmatch