How and when do I collect my annuity?

There are a few choices that you have when choosing to collect your annuity. Some people opt for a lump sum, even though it negates one of the major features of the annuity: payments until death.

The amount of the monthly payments that you receive depends on:

  • The amount of money in your annuity contract
  • The life expectancy of the annuitant
  • The size of the minimum required payments (if any)
  • Whether the payments continue after death or not

There are various different settlement options. Be absolutely sure when you choose, because the decision will be final when you make it.

  • Fixed Amount. With a fixed amount option, you will choose a monthly amount that you will receive until your annuity runs out. There is a possibility that your money may run out before you pass on, and also the chance that you may die before your money runs out. In that case, your beneficiary will receive your payments.
  • Fixed Period. The company will pay you for a fixed amount of time. If you are waiting for a retirement payment from another investment, it may be a good idea to get this fixed money until you start to receive payment from another investment. Again, if you are to pass before the money is fully paid, the remainder will go to your beneficiary.
  • Lifetime Or Straight Life. This plan will continue to pay you money until you die. This is the safest option to ensure that you receive payment until the day you die. Conversely, if you die early, there will be no payments to the beneficiary.
  • Life With Period Certain. With this plan you will receive payments until death - and for a period afterwards, your beneficiary will receive payments too. The longer the period, the lower the monthly payment.
  • Installment. This guarantees that if you die before you have exhausted your funds, the rest will be distributed to the beneficiary.
  • Joint And Survivor. In this option the payments are made to the joint annuitants. In the event of one's passing, the other will continue to receive a lesser amount.

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