Sentences with phrase «many annuity owners»

«A ruling by a Louisiana appeals court recently stated that the entire death benefit from a single premium annuity plan paid to the beneficiary named in that plan was subject to inheritance tax because it was part of the deceased annuity owner's estate,» says annuities specialist Steven Hart.

For instance, in a similar step - transaction - doctrine issue with partial 1035 annuity exchanges and subsequent liquidations (which allowed annuity owners to get more favorable treatment in the multi-step process than could have been obtained if treated as a whole), the IRS ultimately declared in Revenue Procedure 2008 - 24 that as long as the taxpayer waited at least 12 months between the 1035 exchange and the subsequent liquidation, it would be allowed.

If the annuity owner died, you may have several options to receive your inherited annuity proceeds depending on the terms of the annuity contract, your relationship to the person who died, and when the owner died.

That being said, all fixed indexed annuities share the same basic chassis, which is very simple: in periods (typically one - year) where the index declines, they protect principal and all previously credited interest from loss — the annuity owner earns zero interest.

Because in addition to interest and return of a portion of your principal, each annuity payment effectively contains an extra little amount known as a «mortality credit» — essentially, money transferred from annuity owners who die early to those who live long lives.

If you elect to receive an annuity, the combined annuity payments may actually be worth more than the lump sum if the annuity owner lives a long time, essentially beating the mortality table's predictions.

Even then, the annuity owner has the freedom of taking out 10 % every year without penalty.

Insurers are able to tell you how much you'll receive because they hire actuaries to project how many annuity owners will die each year, and the companies» investment analysts forecast investment returns.

Though the annuity owner gives up a chance for the highest possible growth in exchange for a partial cushion against losses, they gain the ability to stay diversified and generate potential growth.

If the annuity owner decides to cancel the annuity and access the funds early, cancellation fees can run as high as 15 % in addition to a 10 % tax penalty.

If the annuity has an 80 % participation rate, and the index to which it is linked shows a 15 % profit, the annuity owner participates in 80 % of that profit, realizing a 12 % profit.

You (the annuity owner) make a lump - sum payment or a series of premium payments to an annuity issuer (the insurance company), which will accumulate earnings at a fixed interest rate (a fixed annuity) or a variable rate determined by the growth (or losses) in investment options known as subaccounts (a variable annuity).

When insurers set the payments annuity investors will receive, they know that some annuity owners will die sooner than others.

So in calculating the payments annuity owners will get, insurers can factor in «mortality credits,» which is insurance - speak for the money that's effectively transferred from those annuity owners who die early to those who live a long life.

However, the annuity owner also bears the risk of the sub-account.

Well, basically they're little supplements, so to speak, that insurers factor into an immediate annuity's monthly payout to reflect the fact that some annuity owners will die sooner than others.

The reason is that when insurance companies create an annuity, they pool the money of thousands of annuity owners, some of whom will die sooner than others.

While some types of annuities allow portions of the account value to be withdrawn for income needs, annuity owners typically can't withdraw the full account value in the early years of the contract without potentially paying a withdrawal charge.

With some types of annuities, this guaranteed income lasts throughout the annuity owner's lifetime, regardless of market performance.

So when setting annuity payments, insurance company actuaries are able to include what are know in insurance circles as «mortality credits,» essentially money that would have gone to annuity owners who die early but that's instead transferred to those who live longer.

If you have good reason to believe you'll die before you reach life expectancy, an annuity isn't a good choice as you'll be the one providing mortality credits to those annuity owners who go own to live long lives.

The idea is that the monthly payments that would have gone to the annuity owners who die early are effectively being transferred to the annuity owners who live a long life.

If the annuity owner died, you may have several options to receive your inherited annuity proceeds depending on the terms of the annuity contract, your relationship to the person who died, and when the owner died.

The annuity owner chooses the level of protection based on goals and risk tolerance.

By paying an up - front fee, the annuity owner receives flexibility never before seen in a guaranteed fixed rate annuity.

During the accumulation phase, the account will be set up to grow cash value based upon the formula selected by the annuity owner.

(It is a good idea for annuity owners to regularly check their beneficiary designations as part of any estate plan.)

As an annuity owner, you have control over how long the annuity is invested, when you receive benefits and how often you are paid.

In almost all cases, when an annuity owner (s) dies, the balance of the account simply passes to a named beneficiary.

These examples provide some context as to what kind of returns indexed annuity owners might expect.

Once the income rider is activated, annuity owners may have limited access to their principal, but lifetime income is guaranteed.

If you die soon after purchasing an immediate annuity, you'll receive relatively little in monthly payments or, to put it another way, you'll be the one providing those mortality credits to annuity owners who live long time.

Basically, this is money that would have gone to annuity owners who die early that can instead be paid to those who live long lives.

In addition, an optional enhanced death benefit is also available if the annuity owner selects the life income option with a protected period at the time of policy issue.

It is important to understand that annuity owners will always have penalty - free access to a portion of their invested funds.

In this way, many variable annuity owners were stuck with a confusing, hard - to - value investment.

With a DIA, the annuity owner has the ability to receive a stream of income at a future date, say at age 85, usually when a need to pay for long - term care services arises, and choose a return of premium or principal option to conserve the principal amount used to fund the annuity for the individual's estate (once death has occurred).

With the optional death benefit, the annuity owner can select a life income with a protected period of one to five years (at the annuity issue date).

The take away here is that the tax laws are in place to make people use annuities for the intended purpose which is to provide a stream of payments to the annuity owner based upon his / her life expectancy.

Annuities are unilateral because the annuity owner is NOT legally obligated to maintain the contract.

Also, upon the annuity owner's death, the estate is typically responsible to pay taxes on the income in respect to decedent (IRD).

You might also ask if your annuities income rider will allow you to take an income based upon the annuity owner's life or can it provide a dual payout for both of the spouses?

Double digit under performance, compounding high fees, and market corrections can cause a variable annuity owner to lose a major amount of the annuities cash value.

Also most variable annuity owners I speak with believe that their principal is protected.

Living benefits can help protect variable annuity owners from running out of money in retirement.

According to a recent Insured Retirement Institute (IRI) survey of Americans aged 50 - 66, a majority (53 %) of annuity owners are extremely or very confident that they will have adequate income in retirement, compared to less than a third (31 %) of non-annuity owners who say the same.

Yet there is no shortage of articles both on the Internet and in print advising would - be annuity owners about the many pitfalls of these instruments.

Beyond the basic fees are the charges incurred each year if the annuity owner decides to add other benefits or features to the variable annuity contract.

If an annuity owner withdraws money from the contract in its early years (usually about six to eight years after purchase), the insurance company will impose a surrender charge on any amount that exceeds the annual free withdrawal amount (which is usually about 10 %).3

When it's charged: Both fees are deducted daily, but that doesn't mean the annuity owner gets a bill every 24 hours.