When considering retirement options, you may have visions of a condo on the beach. But what if you are injured or become disabled before retirement? Will your annuity cover such an unfortunate event?

Accessing Your Annuity

If you are injured or become disabled before retirement, your annuity may include a waiver that will provide payments that are not subject to a surrender fee.

According to Beacon Research (an Illinois based annuity tracking service), the percentage of annuities with waivers has drastically increased over the past decade. Almost all annuities have some type of waiver for emergency situations. Here’s how they measure up:

• 92% of annuities contain a death waiver
• 85% of annuities contain a nursing home or nursing care waiver
• 60% of annuities contain a terminal illness waiver
• 55% of annuities contain a hospital care waiver (for extended stay)
• 20% of annuities contain a disability waiver
• 12% of annuities contain an unemployment waiver

Also, 61% of all fixed annuities contain a waiver that allow you to convert a deferred annuity into an immediate annuity in case of emergency. Situations that will allow you to make early annuity withdrawals vary depending on your company. Before choosing your retirement annuity option, it’s important to be aware of the penalties and waivers involved. You certainly don’t want to put yourself in a situation that you can’t recover from, should a medical emergency or disability arise.

Read the Fine Print

We sometimes tend to glaze over the fine print, especially if the fine print has to do with end of life or emergency details. When choosing a particular company and type of annuity, it’s important that you don’t simply pass over the fine print.

Emergencies happen, let’s face it. If you aren’t thinking of yourself, at least plan for your spouse. Here are the waivers that you should look for:

• Death Benefit Waiver – A death benefit waiver will pass your annuity on to your chosen beneficiary in the event that you should die before you begin to receive annuity payments.
• Nursing Home Waiver – This waiver allows you to access your annuity without surrender fees, should you become confined to a nursing facility.
• Terminal Illness Waiver – This is a provision that waives the surrender fees in the event that you should become terminally ill.
• Disability Waiver – Only two of the ten top selling variable annuities contain a disability waiver, so be careful with this one. The overall risk of disability is actually greater than the risk of death, so you should protect yourself and your family financially.

Do You Have a Waiver?

Your current annuity may or may not contain the waivers we have mentioned. If your annuity does not contain a waiver, it is worth a call to your insurance company to find out if they will add one. Just because you originally signed up without an annuity waiver, doesn’t mean that you can’t add one now.

Just Starting Your Annuity Research?

If you are just beginning the research process and “not quite understanding” annuities, that’s okay….That’s what we are here for. Leave us a comment, ask questions, and read, read, read….We are here to inform you! Start off by reading annuities for dummies for a good start.

Can You Access to Your Annuity Before You Retire? is a post from: Lump Sum Annuity

Retirement is a part of every salaried person and much before his retirement he has to decide about his structured income after retirement. It is here that Lump Sum Annuity comes into picture.

This is how this scheme works. During the tenure of service, it is just and natural that every employee saves some money for his future. He has to invest these savings so that after his retirement, he gets some money every month which he can use for his day to day needs. To encourage the employee to save, some companies have instituted what is called as pension scheme. The employee, instead of investing his amount elsewhere can invest the amount with his employer who in turn would pay him Lump Sum Annuity. This Lump Sum Annuity is paid at a pre fixed percentage every month for the rest of the life of the employee. But the employee has to decide whether to invest with his employer or to withdraw the savings for better investment. Once this decision is taken, it is normally irrevocable.

Normally, the company pays him a predetermined percentage as Lump Sum Annuity. But, this Lump Sum Annuity or pension may diminish in terms of its intrinsic value. This is particularly true when there is inflation. Presuming that the inflation rate is 5% annually, in the next 10 years, the real value of Lump Sum Annuity would have substantially reduced. On the other hand, the investment market may be more favorable and investing in the open market could fetch more benefits than the Lump Sum Annuity. For example, investing in Shares could be more beneficial. But it has an element of risk with it. Unless the person is experienced in the operation of the stock market, this investment is not safe and such persons could opt for Lump Sum Annuity. There are also cases where the employee may find it necessary to withdraw the savings to pay his debts or law suits, medical expenses, etc. Therefore before opting for Lump Sum Annuity, the employee has to think carefully, and he should analyze the pros and cons. It is advisable that he should consult a financial planner.

In addition to this, there are many finance agencies and investment companies including banks who offer Lump Sum Annuity Plan at different rate structure. Some of these plans are also growth investment plans with assured Lump Sum Annuity in addition to some health coverage plans, etc. Some investment plans include payment of Lump Sum Annuity to the spouse or any other nominee either at the same rate or at a revised rate. As an alternative, some retired persons may prefer to invest the bulk in developing real estate property. This type of investment has one advantage; the real value of the property increases and at the same time, with proper planning he can get some returns from the investment made on real estate property if it is leased on monthly rent, etc. The return he gets as rent every month may even be equal to the Lump Sum Annuity which he would get from his employer.

On the part of the employer or the financial agency offering this Lump Sum Annuity, the amount is calculated using the estimates made by a qualified actuary. The actuary calculates taking the average life expectancy, growth rate of funds and many other factors into account before deciding on the Lump Sum Annuity which could be offered to the pensioner.

There is another category of people who are not really dependent on the Lump Sum Annuity for their retired life. Such retired persons may choose lump sum investment plan. In this plan, the person encashes his pension with some investment company. The company will pay a sum which is slightly less than the face value of the pension amount and the difference is the profit for the company. These amounts are normally invested in real estate or in franchise business. But, in this case, the pensioner should ensure that the return on the investment will cover the discount recovered by the company.

In all these investments, a wise decision is all that matters. But many people do not have thorough knowledge of the investment mechanism. They may not be aware of the financial market trend, the health of the financial institutions where investment is proposed to be made, etc. It is here that the role of financial advisers or investment advisers comes into play. They advise the investor on the appropriate investment plan so that the pensioner gets his Lump Sum Annuity or other appropriate investment plan. But it is the financial or investment adviser who can give the right type of advice depending on the need of the investor, his financial propriety, etc.

Lump Sum Annuity is a post from: Lump Sum Annuity