So glad that you joined me for today's topic, which is a question that was submitted in the comments section on my YouTube channel. Always enjoy your comments. Here's the question. Are there annuities where if you begin to take income or annuitize, and then you suddenly pass away, that the bad insurance company, and he put that in quotes, the bad insurance company will keep your principle? If so, under what circumstances?
This question is referring to is a structure called life only. Now, let me give you the Southern version of life only. Life only is it you're in your Learjet, and it hits the mountain. Poof. Money goes poof. It's the highest payment you can receive from a life insurance or annuity company for a lifetime income stream. But when you die, your Bentley hits a tree, your Lamborghini flips, and it explodes when your Learjet hits the mountain, money goes poof, but guess what? You don't have to structure it that way. And that's one of the biggest misconceptions on the annuity planet, and it's a big one that I control.
Unless you want to structure the policy life only, you can structure it so that the annuity company is on the hook to pay regardless of how long you live. And when you die, when you stop breathing, whatever money's left in the account goes in full to the list of beneficiaries of the policy, and the evil annuity company doesn't keep a penny.
There are a couple of reasons you choose life only. Let's go to kind of the obvious ones. You hate your kids. You hate your family. You hate everybody in your family. You don't care about beneficiaries. You're leaving them enough money, right? That's the first reason that you do life only. But most of the time, you would choose life only because you want the highest payment. Life only is the highest lifetime income payment. You are shouldering some of the risks. For as long as you're breathing, the annuity company will pay.
When you die with an annuity. You can structure it. Remember, you can structure your annuity so that 100% of all unused money will go to the list of beneficiaries when you stop breathing. If it's joint life, whatever's in the account, goes to the list of beneficiaries of the policy, and the evil annuity company doesn't keep a penny.
The second question I thought was a good one was what happens when someone you know with an annuity dies? Meaning that my mom has an annuity. My dad had an annuity. My wife had an annuity, or my spouse had an annuity. They pass away. It depends on how the annuity's structured. It depends on the type of annuity. Whether you can continue that as a spouse or a beneficiary, the death benefits of an annuity come down to the type of annuity you have.
There are many different types of annuities. So the death benefit when someone you know dies with an annuity, call me. I can walk you through what they own. And I'll explain the options to you from a death benefit standpoint.
Now, for an annuity that has no period certain, like life only, it's paying you for life as long as you live and long as you're breathing. How does the annuity company know of your passing? The checks keep coming until question mark, question mark.
How does the annuity company know when you will die? I always say annuity companies have big buildings because they can project when you die. So, they're not guessing like a property and casualty company is when a hurricane's going to hit or a tornado's going to hit. If you're getting these ongoing payments, no, it's not going to happen for infinity, and it's not going to slip through the cracks, and someone will not find out. They're going to find out, okay? They will because they have the big buildings, and they're not going to pay to someone who ain't breathing. It's that simple.
I don't know the ROI until you die. Up until then, you're transferring the risk.
Never forget to live in reality, not the dream, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.