Fixed Annuities And The Retired Senior.

Mar 20, 2013

By Rick Law, Elder Law Attorney, and Senior Advisor in Aurora, IL

Fixed Annuities are investments issued by insurance companies that are primarily geared toward retirement savings, promising the investor a fixed series of payments for a predetermined length of time.

Not all fixed annuities are the same, so investors must compare one fixed annuity with another in a couple of key areas.

First, there are two options for owners of fixed annuities when it comes to paying premiums:

• The installment premium method, in which the annuity owner pays premiums over an extended period of time (say, 10 years).
• The single premium method, whereby the owner pays one lump sum into the annuity account.

Next, fixed annuities typically provide the account holder options as to how benefits will be received, utilizing one of two distribution methods:

• Immediate, where the annuity issuer begins payments right away, or within a very short period of time, until both the initial investment and the interest are depleted;
• Deferred fixed annuities wait until the end of a specified time period prior to paying out funds. This time period may be a certain number of years, or it may be when the annuity owner reaches a certain age, such as 65 or 70

Once a time period is selected for payouts to begin, one must also compare the length of time that their fixed annuity will pay. There are primarily three payout periods with fixed annuities:

• Life annuities pay income bene#ts to the annuitant as long as he or she is alive. With this option, benefits cease once the annuitant passes away.
• Term certain annuities offer payments that are received until a predetermined date or term. If the annuitant passes away during the predetermined time period, the insurance company keeps the remaining value of the annuity contract.
• Life with term certain is a third option. With this type of annuity, payments are received as long as the annuitant is alive. However, if they pass away during the predetermined time period, benefits continue to be paid to a beneficiary for the remaining term of the fixed annuity contract.

If you’re ready to start getting your estate in order and secure your assets for the “worst-case” scenario, please give our office a call at 800-310-3100. Your first consultation is absolutely free.  We’ll let you know what steps you need to take, right now, to protect yourself and your family.  Call now.

Rick Law

Elder Law Attorney at Law Elder Law, LLP
Rick was named the #1 Illinois elder law estate planning attorney by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine, TheStreet.com, and numerous newspapers and articles. Rick is the lead attorney for Law Elder Law, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future.  Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care.  Appointments available in Chicago, Aurora, Oak Brook, Schaumburg, and Joliet.  Call 800-310-3100 for your free consultation now!