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DO YOU LOSE THE BALANCE OF AN ANNUITY IF YOU DIE?

One common misconception about annuities is that you lose the balance of the annuity if you die. In the case of  Fixed Indexed Annuities (FIAs), the money remaining in your annuity can pass to one or more named beneficiaries after your death.

You can even choose to set up your FIA as “joint life” in order to provide you and your spouse guaranteed income for life, no matter how long each of you live.

Another popular option is called a guaranteed return of premium, which ensures a minimum number of year’s payments are made by the FIA, even if you die. The maximum guarantee period is 10 years. If you die during the guarantee period, the FIA will continue to make income payments until the end of the selected guarantee period or you could select that the remaining payments are paid as a lump sum (this option is not permitted where the guarantee period is 10 years.)

However, before purchasing a FIA, consider the following important questions to ask an insurance agent.

  1. How is the interest calculated and applied?
  2. What are the terms and conditions for receiving payments?
  3. Are there extra charges for withdrawals if something major comes up in your life?
  4. What, if any, penalties must you pay for ending your contract early?