Understand Deferred Income Annuities
Deferred Income Annuities, also known as Longevity Insurance Guarantees and Lifetime Income Guarantee Contracts, have several acronyms- DIA’s, LIG, or just Longevity Insurance. They are an exciting evolution of the most traditional form of annuity, the Immediate Annuity.
With a Single Premium Immediate Annuity, or SPIA, you buy lifetime income that starts immediately, and generally do so with the payment of a single premium amount. These types of annuities are explored in the Immediate Annuity Pages.
By contrast, a Deferred Income Annuity offers all the benefits of longevity protection and lifetime income, but it does it in a more efficient way by deferring the start date of the income stream.
A few of the main benefits of Deferred Income Annuities are:
- Build safety around your entire portfolio by eliminating the risk of outliving your money.
- Plan effectively with the rest of your assets when the single biggest unknown is solved.
- Cream off the best of the best that the Insurance Company can offer- Mortality Credits.
- In a low rate world, your payout on a Deferred Income Annuity can be tremendous.
Who It’s Right For
The primary benefit from a Deferred Income Annuity is a high, guaranteed, lifetime payout.
Therefore, the perfect buyer for these types of payments is a relatively young (40’s to 50’s) aged, healthy individual or couple who have a high expectation of longevity.
It’s also perfect for relative affluent people for whom the premium is a small percentage of their assets. It allows them to enjoy a higher standard of living and spend down their money confidently.
Quite simply, annuitization of assets- meaning, turning your assets into the maximum possible spendable lifetime income at the lowest risk- is mathematically proven to be only possible by using income annuities.
And a deferred income annuity skims off the absolute best a carrier has to offer.
Who Should Not Consider This Annuity
The major disadvantage of a pure longevity income insurance policy is that when you pass away, any unrecovered principal is surrendered to the insurance company.
Now, there are ways to structure the contract to continue payments in your absence, give us a call for more.
But those who can not afford to support themselves prior to the start of income from a DIA policy, or those who do not believe they will live well into their 90’s, may not find the risk of living too long to be worth the price of giving up a portion of their assets long in advance.
How To Buy
To get started with deferred income annuities, give us a call. We will generate current market quotes based on your age and discuss your income needs to see if they are appropriate for you.