Single Life Annuity

An annuity that pays regular income to an individual after retirement is known as single life annuity and the insured individual is known as the annuitant. There are certain times when single life annuity type can really make great sense, particularly when the individual who is buying the annuity plan is ‘single’ or does not want to pass along annuity advantages to someone else.

Remember that annuity is a type of ‘insurance’ and usually sold by various insurance firms through agent networks. The very next thing to know about annuities is that they can be a fantastic way of a stable stream of income for the lifetime of an individual who has purchased the annuity.

How Single Life Annuity Works?

The potential annuitant first makes a lump-sum payment to the insurance firm with the anticipation that payments may either start after some time in future or may start immediately. When those ‘payments’ begin, the investment and interest income earned from that lump-sum are disbursed over the pre-determined time period set between the annuitant and the company. The payments carry on until the individuals holding annuity plan passes away, and at that point of time, all payments discontinue and the funds in annuity plan relapse to the insurance firm.

Payment Options with Single Life Annuity

In single life annuities, payments usually end with the death of the annuitant, as mentioned above. However, the buyers can also opt for buy ‘refund’ option, which means, any amount remaining in the single life annuity plan will be given to beneficiaries named in the agreement, after the insurer dies. A guaranteed term or period can also be included in the plan. An assured term makes sure that all ‘payments will be made for a set time period, even if the person dies before the conclusion of the term’. In such circumstances, the payments usually are made to annuitant’s beneficiary or real estate until the set period ends.

Interest rates earned with ‘annuity funds’ are tax deferred until the rates are withdrawn. In the United States, the annuitants should be aged 59 1/2 years or older to keep away from paying ‘penalty tax’ on the funds taken out from the single-life annuity scheme.

Types of Single Life Annuity Types

More often than not, an annuity plan is either an immediate or deferred annuity. A ‘deferred single life annuity’ has two major stages known as payout and accumulation. The funds are credited into the annuity plan and gets interests for many years throughout the accumulation stage. During payout period, annuitant receives payments that incorporate accumulated interests and principle. The amassed interest element of payouts is ‘taxed’ at the current tax rates of the annuitant.

Single life annuity shoppers who hold immediate annuity usually start getting payments within first year of the annuity agreement. The remaining amount carries on as the earning of ‘tax deferred’ interest; the income-tax on earned interest rates is unpaid when it is taken out from the annuity plan.

Hence, it is very important to warily understand the concept of single life annuity plan, and then decide to buy one from a reputed insurance company.

Life Annuity – A Lifetime Opportunity

A life annuity is a contract with the insurance company, where a seller or the issuer i.e. the life insurance company makes a series of payments to the buyer in the future, in exchange of an immediate lump sum payment or a series of regular payments. The flow of the payment is an unknown duration primarily based on the death of the annuitant. The contract terminates on the death of the annuitant, if there are no beneficiaries following the annuitant, whose name has been mentioned in the contract. Thus life annuity can be termed as longevity insurance.

Phases

There are mainly two important phases for life annuity- the accumulation phase and the distribution phase. The accumulation phase is the phase of the customer depositing the money into the account. The distribution phase is the phase where the insurance company makes income payments until the death of the annuitant or annuitants named in the contract. The phases of the annuity can be combined as retirement savings and retirement payment plan. The payments can also be as the annuitant makes a regular contribution to the annuity until a certain period and then starts receiving regular payments from it until death.

Types of Life Annuity

Fixed and Variable annuity – Annuities whose payments are made in a fixed amount are called fixed annuities. Variable annuities on the other hand pay amount that vary according to the investment performance. There are many objectives that can be stated for the use of variable annuity. One recognizable fact is for the motive of tax deferral. Money deposited on the variable annuity grows on the basis of tax deferral. Therefore the taxes are not due until a withdrawn is made. Variable annuities also provide a variety of funds from the various money managers or the investment managements.

Guaranteed Annuities

There are chances that the annuitant may die before the recovery of the value of the original investment. This possibility of the situation is called forfeiture. This is an undesired situation. In this case the annuitant’s beneficiary continues to receive the amount at regular intervals. The tradeoff that is found between the pure life annuity and the life-with-period certain annuity is that in exchange of the reduced risk of loss, the annuity payments for the latter will be smaller.

Joint Annuities

Annuity products include joint – life and joint – survivor annuities. In this type the payments cease with the death of one or both the annuitants. In case of an annuity for a married couple payments may cease on the death of the second spouse. In joint-survivor annuity the payment is reduced to the first annuitant with the death of the second spouse.

Impaired Annuity Payments

In case the annuitant’s life expectancy has been reduced due to a severe medical problem the terms for the payment of annuity are improved. This type of annuity is known as impaired annuity. It involves a process of medical underwriting. This type of annuity has developed to a great extent with the growing time.http://sanfranciscoinsuranceonline.com/

What Are the Requirements For Purchasing an Impaired Life Annuity

Usually, the people who opt for impaired life annuity are those who are suffering from some kind of a medical ailment and there is a chance that it might affect their life expectancy in the coming future. Most regular annuity incomes usually are stopped or closed once a person passes away. Also those who are suffering from some medical ailment might not get a good income guarantee from a regular annuity plan. Such people have the option of purchasing an impaired life annuity which will provide them with higher payment options than regular annuities.

If the person purchasing the annuity is in ill health, he or she can actually get a better deal of annuity payments from an impaired life annuity plan. There has been a great deal of awareness programs being undertaken to make people realize that they have the option to apply for better annuity rates.

Who Can Qualify For an Impaired Life Annuity

People who have been involved in some kind of an accident and are suffering from some form of mobility problems but do not have any life threatening complications might not get improved annuity rates. Similarly, people who have had heart conditions in the past but have shown considerable improvement or no signs of any subsequent heart problems will also not be considered for payment of higher annuity rates by the Life Offices.

People who are currently suffering from some disease or medical complication that is life threatening are usually the ones who might get the higher annuity rates option. In cases where a person or his/her spouse is expected to have a reduced or shorter life expectancy, the chance of getting a higher rate annuity payment option is very strong. A maximum uplift of annuity rates can be expected up to 75% of the rates of a regular annuity plan.

Apart from people suffering from critical diseases or life threatening medical conditions, those who have other problems of a slightly less serious nature such as diabetes and obesity can also apply for higher rate of annuity payments. The importance of the applicants of such nature has gone up considerably currently and there are many who have been awarded special life annuity plans under such conditions. At the same time, certain chronic obstructive pulmonary disease and non malignant cancers have taken a back seat when it comes to chances for annuity payment options for the impaired.

Procedure for Applying

If you are planning to apply for impaired life annuity, it is advisable to make several applications to different insurance companies. This is being advised because in such cases, medical underwritings are required and the rates being offered differ from company to company. Once your applications are received by the Life Offices, a thorough review of your medical underwriting will be performed and the result will be sent back to you within 2 or 3 days. Once you get the results regarding the life annuity rates that the Life Offices will be offering, you can compare it to the standard rates to see the kind of enhancement you are being provided.

Click on the link below to learn more about different types of Annuities.