|
Questions to Ask When Selecting and Titling an Annuity
Here is a list of questions to ask when selecting and titling an annuity. By no means is this a comprehensive list of every question that needs an answer, but these questions cover some of the most important titling areas.
1. To whom does the contract pay when different parties on the contract die?
The answer is important in order to prevent the contract paying to the wrong person.
2. Whose death triggers the enhanced death benefit to pay out?
On a contract with spouses, not all contracts pay out the enhanced death benefit when either spouse dies.
3. If spousally continued, is the contract continued at the enhanced death benefit value or just the current account value? And, if continued, are the surrender charges waived?
Understanding the options your clients have at death are critical to ensure the best decision is made. Death benefit values in excess of the account value can be left on the table due to a poor understanding of the options available.
4. If spousally continued, what happens to the various benefits on the contract?
- Do they terminate?
- Do they reset?
- Do they continue uninterrupted?
- Do different parties to the contract cause different consequences?
The particulars of a living or death benefit vary widely upon death; knowing these answers will help you make a better decision.
5. How do withdrawals impact the different living and death benefits on the contract?
Being able to compare the various ways withdrawals impact the benefits helps in selecting the most suitable option.
6. If qualified money, how do RMD withdrawals impact the different guarantees?
RMD withdrawals have the ability to erode a benefit. Know if the benefit has special treatment for RMD withdrawals before it’s too late.
7. Do guarantees on the contract stop or simply level off when clients reach older ages?
8. Is annuitization forced at a particular age?
Your older clients need a little more attention than your younger ones when it comes to these questions.
9. If a trust is owner, the death of which parties will cause the contract to pay out?
10. If a trust is the recipient of the annuity assets, and the surviving spouse is sole beneficiary of the trust, is spousal continuation allowed?
When working with spouses, be careful with trust ownership or trust beneficiaries. One line that sums up the topic: Annuities and trusts don’t mix.
|
