Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
An annuity is a legal contract that allows you to designate a beneficiary and contingent beneficiary. If you die during the accumulation phase of a deferred annuity, the amount accumulated will be sent directly to your beneficiary outside of probate. If you die during the disbursement phase the particular option that you have selected will dictate the distribution of any remaining assets. For example if you have selected a joint life annuity, some portion of the payment will continue until the death of the second annuitant.
Life & Health Insurance Agent, The Tooker Agency, Riverhead NY
After you make a contribution into an annuity, the value grows tax deferred. This is one of the key reasons that people invest in annuities. If you have had money invested in an annuity for a period of time there may be a large amount of deferred income. When you die your beneficiary will receive the proceeds and will have to pay income taxes on the amount of the deferred income.
There is a spousal exemption to this however, so if your beneficiary is your spouse they will have the option of continuing the deferral.
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There is a spousal exemption to this however, so if your beneficiary is your spouse they will have the option of continuing the deferral.