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Deferred Annuities

Before You Let Your Deferred Annuity Be Owned By or Payable to a Trust…Read This

John L. Olsen

If you own, or are considering buying, a deferred annuity and are thinking of having a trust own or be the beneficiary of that annuity, you need to be aware of the tax consequences. In this article, we’ll examine those consequences. But before we start, we need to be clear on two things: First, the author is not an attorney and is not giving you tax or legal advice. You should consult your legal advisor for that. Second, the tax treatment describe here applies only...

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How Do You Know If An Annuity Is “Suitable” For You?

John L. Olsen

If you are considering the purchase of some kind of annuity, you know what you want and need. But how can you determine whether the annuity product being recommended to you will meet your needs better than a different kind of annuity or some non-annuity alternative (such as a CD or mutual fund)? And how did the insurance agent showing you the annuity decide that the product he’s showing you is the one most suitable for you? The answer to both questions lies in that...

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Can I Buy An Income Rider Without Buying An Annuity?

Stan The Annuity Man

Question: Is there a way to buy an income rider without having to buy an annuity?  from Steve in Houston, TX Answer: This is one of the most forward thinking and insightful questions I’ve ever received.  You Steve, are a visionary my friend.  Currently, there are a select few companies working on income riders that are “non-annuity”, with more coming in the near future in my opinion.  People want guarantees and benefits that annuities provide, but in many cases, they don’t want to tie their...

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Are Annuities Regulated At The State Or Federal Level?

Stan The Annuity Man

Question: Who regulates and oversee annuities?  Is it at the state level or at the federal level?  Bart from Santa Barbara, California Answer: Great question Bart, but as usual with annuities, the answer is a little complex.  Annuities are regulated at the state level, and each state has a guarantee fund that backs up policies to a certain dollar amount.  To find out the specific levels for your state, go to www.nolhga.com.  There’s no uniformity in coverage, and every state has different dollar protection limitations. ...

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How Are Annuities Taxed?

Stan The Annuity Man

Question: How are annuities taxed? from Darrell in Phoenix, AZ Answer: That’s a pretty broad question Darrell, but and extremely important one.  Let me get right to the point when it comes to annuities and taxes.  Always use a CPA or qualified tax professional for any type of tax questions that are related to annuities.  Never take an agent’s word for it.  I probably know more about annuities and taxes than most (heck, I’m Stan The Annuity Man!), but even I defer all questions to...

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Who Gets The Money In My Deferred Annuity If I Die?

John L. Olsen

With regard to “who gets the money” in a deferred annuity, the answer is not quite as simple as many believe. The simple answer is “the beneficiary named in the policy” and that’s true much of the time – but not always. Let’s start with some basics in annuity contracts: –Annuitant: Person (must be a human being) whose age and sex determine the amount of income payments. –Owner: Person or entity (in need not be a human being) who owns the rights in the annuity...

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Facts About Annuities That Your Agent Should Share With You

John L. Olsen

FACT #1: The economic benefit of payments under a Guaranteed Lifetime Withdrawal Benefit rider (GLWB) doesn’t materialize until after you’ve received your principal and all of your earned interest.           Here’s an example: At your age 55, you deposit $100,000 into a deferred annuity with a GLWB rider that guarantees a “roll up” interest rate (on the “benefit base”, on which the withdrawal payments are calculated) of 7.2%, compounded for ten years (which is the same as 10% simple interest). That produces a benefit base of...

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Myths About Annuities

John L. Olsen

One of the difficulties in working with annuities is the persistent mythology connected with them. Much of the “conventional wisdom” regarding these contracts is not “wise” at all, but is often mistaken, confused, or downright wrong. Here are five of my favorite “myths”: 1) “Annuities are…” Any sentence that starts this way will be misleading at best. Why? Because all annuities are not the same. Indeed, a true statement about deferred annuities is likely to be partly or wholly untrue when applied to immediate annuities,...

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Can I Buy Annuities With No Fees or Surrender Charges?

Stan The Annuity Man

Question: Can I buy annuities with no fees or surrender charges? Are there no load annuities like no load mutual funds?  Ron in Roanoke, Virginia. Answer: Phenomenal question Ron!  The annuity industry is very late to the party when it comes to “no load” type offerings that are common in the mutual fund industry.  No load can mean a few things.  It can refer to no fees for buying a strategy, no fees to keep the strategy, and no fees to sell the strategy.  Let’s...

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