Medicare advisors

Deferred Income Annuities

Product Overview

Sometimes called longevity insurance or a longevity annuity, a Deferred Income Annuity (DIA) usually begins with a single, upfront payment and eventually pays a set amount starting a given number of years after the policy is purchased.

One of the main advantages is that taxes on the interest earned are not paid until the funds are withdrawn. Other advantages of a Deferred Income Annuity include:

  • Higher Returns = Insurance companies usually offer higher interest rates for these products. Because part of the principal is returned with each payment, clients receive larger amounts than they would be provided by interest alone.
  • Security = This product provides stable lifetime income which can never be outlived, or which may be guaranteed for a specific period of time. A client’s principal is secure because funds are guaranteed by assets of the insurer, and not subject to financial market fluctuations.
  • Simplicity = Once it’s set, the only work required is collecting regular payments; there’s no need to watch markets or track interest rates or dividends.
  • Preferable Tax Treatment = Unlike other types of annuities — which have a front-loaded tax burden — a DIA defers taxes until later, when it may be taxed at a lower rate.
  • Customization = In addition to a DIA’s built-in flexibility — deciding how much to spend, how long to wait for payments, etc. — clients can choose from various add-ons and options. For example, a “life with cash refund” would return the premium to survivors if the client dies before 85; if the client dies after payments begin, the difference between the premium and payments received would be returned to them.
  • No Annual Account Management/Maintenance Charges = 100% of the premium goes towards the client’s monthly income.

Why Agents Offer Deferred Income Annuities

Just as Deferred Income Annuities aren’t the best fit for every client, they aren’t always the best fit for Agents. Consider these questions:

  • Are these plans beneficial for the people in your community and the areas you serve?
  • Do you offer similar/competitive products?

There are many compelling reasons to offer Deferred Income Annuities, such as:

  • You can help families with some of the most difficult decisions of their life
  • You can provide your clients with peace of mind, as they will know they have a health plan behind them
  • You’ll be serving the needs of your clients and community
  • You can offer a profitable product that will help your bottom line

How to Get Started with Deferred Income Annuities

If you decide to offer Deferred Income Annuities, we recommend talking to someone from the Medicare Advisors team of experts. They’ll provide answers to your questions, and have tools available to support your new product offering.

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