Authored by Matt Nutzman The purpose of an annuity is to protect against the financial risk of living too long…the risk of outliving retirement income…by providing an income guaranteed* for life. In fact, an annuity is the ONLY financial vehicle that can systematically liquidate a sum of money in such a way that income can be guaranteed* for as long as you live! Here’s How an Income Annuity Works:
- The annuitant pays a single premium to an insurance company.
- Beginning immediately or shortly after the single premium is paid, the insurance company pays the annuitant an income guaranteed* to continue for as long as the annuitant is alive, assuming the annuitant selects a life income option. There are other payout options also available.
- The insurance company pays survivor benefits, if any, to the annuitant’s designated beneficiary after the annuitant’s death.