Income Annuities

An income annuity is basically a contract between you and an insurance company. You agree to make one or more payments. In exchange, the insurance company agrees to provide you with a stream of income payments that can last a certain period of time or for as long as you live.

You can think of an income annuity as life insurance in reverse. With life insurance, you make a series of payments to an insurance company and eventually, your beneficiary receives a lump sum payment when you die. With an income annuity, you do the opposite. You make a single premium payment and either immediately or at some point later in life, you receive a series of payments that can last as long as you live.

There is no accumulation period with an income annuity. You don’t put your assets into investment options or elect a guaranteed period with a fixed interest rate. You simply make one or more payments to the insurance company in exchange for the promise of lifetime income payments immediately or later in life.

With a deferred income annuity, you know how much income you’ll receive and when it will begin. For example, let’s say you predict that you’ll need $70,000 a year to live on. You put enough money into your deferred income annuity so that it will provide $70,000 a year starting at age 85. You know that your other assets need to last only until age 85, because after that, you have the income you need.

There are no investment choices within an income annuity. This kind of annuity doesn’t work like that. You make one or more payments to the insurance company and they handle the investing. Because of that, you are guaranteed to receive lifetime income and you may get more income than you would if you’d tried to invest it yourself.

Because MetLife manages its company and its businesses with discipline and a long-term approach in order to ensure that it can fulfill its promises. The guarantees within MetLife’s annuities are backed by the financial strength and stability of MetLife. This financial strength comes from MetLife’s high quality diversified portfolio of investments, its diversified mix of core businesses and its risk management strategies.

With an immediate annuity, you can begin to receive income from day one up until 12 months (sometimes more) from your contract start date.

Deferred income annuities have you wait at least a few years before starting income. However, typically, the longer you wait (the more years pass between when you purchase the annuity and when you begin taking income), the larger your income payments will be.

Some income annuities offer a death benefit, so if you die before beginning to take income, your assets pass to your beneficiaries.

If you have a qualified annuity, all of the principal and earnings you withdraw will be taxed at ordinary income tax rates. If you have a non-qualified annuity, just the earnings portion of the payments are taxed as ordinary income.

Each non-qualified annuity payment you receive will be a combination of taxable and non-taxable income. This is a good way to help manage your taxes on an ongoing basis.

Like a fixed annuity, there are no direct fees to pay with an income annuity. The insurance company’s costs are built into the contract.

You can purchase a fixed or income annuity through an authorized/licensed bank, broker/dealer, wirehouse or independent financial advisor.