Syndicated Financial Columnist, Host of the weekly talk show Steve Savant's Money, the Name of the Game, Scottsdale Arizona
Tax deferred annuities can be be annuitized for life or immediate annuities with a life option on the annuitant. Non-qualified annuities also have a feature that allows basis to be amortized to life expectancy as part of the annuity payment until its exhausted. That feature is an additional benefit for guaranteed income you can't outlive.
Lifetime annuities are annuities that pay the annuitants monthly payments for the rest of their lives. The annuity can be an immediate annuity, where a lump sum is used to purchase the annuity, and payments begin right away. Or they can be deferred annuities, where money is put into the annuity over a number of years before the annuity is annuitized. The annuity can be fixed, with guaranteed fixed payments. Or it can be variable, which may generate higher or lower payments than a fixed annuity.
When the annuitant dies, the payments of a lifetime annuity end. If the annuity holder lives longer than expected, they can do very well with a lifetime annuity. If they live a shorter than expected, that is not favorable to the annuity holder. However, some contracts allow payment of an amount equal to the initial investment to the beneficiary.
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When the annuitant dies, the payments of a lifetime annuity end. If the annuity holder lives longer than expected, they can do very well with a lifetime annuity. If they live a shorter than expected, that is not favorable to the annuity holder. However, some contracts allow payment of an amount equal to the initial investment to the beneficiary.