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What Is a Longevity Annuity?

Stan The Annuity Man

Question: What is a longevity annuity?  Is this something new? – Ben from Dallas, Texas

Answer: Thanks for the question Ben, and this is a product that I recommend a lot to my clients.  The longevity annuity was actually introduced to the market about 7 years ago.  It has also been called a “Deferred Income Annuity” and also a “Deferred Immediate Annuity.”  Confused?….don’t be because its strategy is easy to understand, which is a primary reason for its growing popularity with consumers.

First of all, Longevity Annuities should be used for target date income planning, or what I call “Income Later.”  There is no market growth component to this strategy, and it is literally a future individual pension plan just like a company pension or your Social Security payments.

Below are a some key points to know about Longevity Annuities:

  • There are NO annual fees
  • You can defer up to 45 years
  • Policies can be issued at any age
  • Can be used within IRA’s as well as non-IRA accounts
  • COLA (Cost of Living Adjustment) annual increases can be added contractually to combat inflation

Longevity Annuities are a direct competition to deferred annuities with attached income riders, and will continue to grab market share because if it’s simplicity, transparency, and easy to understand structure.

Currently, there are less than 10 carriers that offer Longevity Annuities, with NY Life and Guardian being the leaders in this new strategy.  That will change rapidly as carriers figure out that simplicity always wins with the consumers.

So if you are looking to set up a lifetime income stream to start sometime in the future, don’t allow your agent to just show you deferred annuities with income riders.  Make them also show you the best Longevity Annuities as well.  The commission is less for the agent, which is why most don’t show you this option.  My answer to that is, who cares about the agent’s commission!  It should always be about you, the client.

*If you have a question for Stan The Annuity Man, please send your question to stan@stantheannuityman.com.  He will answer all questions directly, and might include yours in his next Annuity123 “Ask Stan The Annuity Man” blog.

Click here to see more of Stan’s educational articles.

About the Author:

Stan The Annuity Man is a nationally recognized annuity expert and annuity critic, and has been called the national consumer advocate for annuities… and a walking middle finger of annuity truth.  He is a weekly RetireMentor columnist for The Wall Street Journal’s MarketWatch.com, and is the exclusive annuity contributor for About.com.  His highly acclaimed book, The Annuity Stanifesto, is a top seller in its category, and is known as the go to resource for all things annuity.

Stan The Annuity Man has clients nationwide, and is considered one of the top independent annuity agents in the country.  You can learn more at www.StanTheAnnuityMan.com.

 

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