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12 things you need to know about Income Annuities

  • Question: How does an income annuity work?

    Answer: If you are in or near retirement, you probably have some money set aside in the form of savings, CDs, mutual funds, 401(k) plans, or IRAs.

    An income annuity allows you to convert part of your retirement funds into a stream of guaranteed lifetime income payments using a single lump sum of money called a “premium,” or through flexible premium payments over time, depending on the type of product selected. In return, you receive a check from New York Life on a monthly, quarterly, semi-annual or annual basis, guaranteed, for the rest of your life, starting when you choose it to, usually at or after retirement.

  • Who guarantees my income?

    Your income is guaranteed by New York Life Insurance and Annuity Corporation (NYLIAC), a wholly owned subsidiary of New York Life Insurance Company An industry leader for nearly 170 years, New York Life Insurance Company has earned the highest ratings for financial strength currently awarded to any life insurer given by all four leading independent rating agencies: A.M. Best (A++), Fitch (AAA), Standard & Poor’s (AA+), and Moody’s Investors Service (Aaa). (Ratings as of 06/04/2013.)

    New York Life Insurance Company is America’s largest mutual life insurance company. † Being mutual means our primary focus is on creating long-term financial safety and stability for our policyholders, rather than the short-term gains favored by Wall Street. When we say New York Life is “The Company You Keep®,” that’s a promise for life.*

  • How can I benefit from an income annuity?

    An income annuity can help protect against the risk of outliving your savings. No matter how long you live, you will always have the security of knowing that you have a regular monthly income. The amount you receive each month is guaranteed, and payments will continue for as long as you live.

  • How can I change my name on an annuity contract?

    Visit the Virtual Service Center to download the necessary forms for your needs.

  • What other advantages does an income annuity provide?

    An income annuity can provide protection against losing retirement savings if stock market performance declines. Regardless of the ups and downs of the financial markets, you can be confident that your annuity income is locked in and guaranteed. Additionally, with this product you set aside a reasonable part of your assets to help cover future living expenses. Monthly income checks, should you choose this payment option, make it easier for you to stay on budget, and to ensure your basic needs such as food, housing and health care are covered.

  • What is the rate of return on an income annuity?

    An income annuity is not an investment that provides you with a rate of return over a fixed period of time, like a CD****. Rather, it’s an income product that provides you with fixed monthly income that is guaranteed for life…no matter how long you live…and no matter how the markets perform. The total payout you receive from this income annuity will be largely determined by your own longevity. The longer you live, the more income you will receive.

  • How soon can payments begin?

    Depending on the income annuity you decide to purchase, income payments can begin now or later. If you purchase a single premium immediate annuity, you’ll receive income within 12 months of purchase—beginning one month after purchase (for monthly payouts), one quarter after purchase (for quarterly payouts), and so on. If you purchase a deferred income annuity, your payments will begin at any date of your choosing two to 40 years in the future. Just like a single premium immediate annuity, you can choose to receive your income payments monthly, quarterly, semi-annually, or annually.

  • Are there age or health restrictions?

    Issue ages vary depending on the type of annuity you purchase, and the tax qualification of the funds you use to purchase your annuity. Additional age restrictions may exist depending on specific benefits selected at time of purchase. No medical history is required.

  • What kind of funds can I use to purchase an income annuity?

    Answer: To fund your annuity, you may want to use a portion of your checking or savings accounts, CDs and mutual funds, or inheritances. You may also be able to transfer certain retirement accounts, such as your IRA, 401(k) or lump-sum pension plan payout. In some cases, you can even combine multiple assets to fund an income annuity, however, tax-qualified and non tax-qualified funds may not be commingled.

  • How much of my money should I use for an income annuity?

    You can purchase an income annuity with any amount of $5,000 or more, though premium payments of $3 million or more require prior New York Life Insurance and Annuity Corporation approval. (Includes aggregate premiums from multiple policies).

  • What happens to my money if I pass away prematurely?

    Unlike some income annuities, one of the payment options you can select is a "Cash Refund" feature that guarantees that you will not lose any of your premium.If you die before your income payments equal the full amount of your annuity purchase price, your beneficiary will be paid the difference. Additional payout features are also available.

  • Can I ever withdraw more than my monthly income?

    Money used to purchase an income annuity will be permanently locked into the contract and can only be returned in the form of income payments. However, if you are at least age 59½, you may be able to access future payments, which can be helpful in the event of an emergency.*

    A Payment Acceleration Feature enables you to receive your next scheduled monthly payment, along with six subsequent payments—for a total of seven months of income payments paid to you all at once. When you exercise this option, your income payments will not be paid for the next six months. This feature may only be exercised three times during the life of the policy and is only available on non-qualified polices with monthly payment schedules.

    An Up to 100 percent Cash Withdrawal Feature**, available on our Guaranteed Lifetime Income Annuity (GLI), allows the policy owner, after age 591/2 a one-time withdrawal of up to 100% of the discounted value of remaining guaranteed payments at any time within the guaranteed payment period. Once this option is exercised, future income payments through the end of the guaranteed payment period will be reduced by the withdrawal percentage you elected. If the annuitant is alive at the end of the guaranteed payment period, full annuity payments will resume for the life of the policy. This feature is only available on non-qualified policies with a Life with Cash Refund or Life with Period Certain payment option.

    A 40 percent Cash Withdrawal feature (based on life expectancy)** , is available on our Guaranteed Lifetime Income Annuity (GLI). This allows you a one-time withdrawal of 40 percent of the discounted value of remaining payments expected to be paid to you based on your life expectancy when you purchased your policy. You may exercise this option on the 5th, 10th, or 15th anniversary of your first income payment, or upon proof of a significant, financial loss as specified in your policy***. Once this option is exercised, future income payments will be reduced by 40% for the life of the policy. This feature is only available on non-qualified policies with a Life Only or Life with Percent of Premium Death Benefit payment option, and on all qualified policies.

+Based on revenue as reported by “Fortune 500, Ranked within Industries, Insurance: Life, Health (Mutual),” Fortune Magazine, May 20, 2013. See http://money.cnn.com/magazines/fortune/fortune500/2013/faq/ for methodology.

The New York Life Guaranteed Lifetime Income Annuity (GLI) and New York Life Guaranteed Future Income Annuity (GFI) are issued by New York Life Insurance and Annuity Corporation (NYLIAC), a Delaware Corporation, a wholly owned subsidiary of New York Life Insurance Company, 51 Madison Avenue, New York, NY 10010. Products available in jurisdictions where approved. All guarantees are subject to contract terms, exclusions, and limitations, and the claims-paying ability of NYLIAC (a Delaware Corporation). GFI contract is irrevocable, has no cash surrender value and no withdrawals are permitted prior to the income start date. Income payments are guaranteed at least as long as the annuitant is living, provided the annuitant is alive on the chosen income start date. The Life Only payout option will not provide a death benefit either prior to, or after, the designated income start date.

* Proceeds will be fully taxable at the time of receipt You should consult your own tax advisor prior to exercising a withdrawal feature, such as Payment Acceleration and the Cash Withdrawal under an immediate annuity, to confirm tax consequences and penalties, including a retroactive penalty that may apply to policies purchased prior to age 591/2. Payment options and features available only in jurisdictions where approved.

** The cash withdrawal amount is subject to an Interest Rate Change Adjustment that will increase or decrease the withdrawal amount based on the change in interest rates, as measured by the 10-Year Constant Maturity Treasury (CMT) Index, between the time you purchase your policy and the time you elect to receive the cash withdrawal. The 40 percent Cash Withdrawal feature is not available after the annuitant’s life expectancy. The withdrawal is not 100% of the original purchase payment and is generally less than this value. Instead, it is based on the present value of the future guaranteed payments on the policy at the time of withdrawal.

The guaranteed payment period for the Life with Cash Refund and Life with Installment Refund payment option is determined by dividing the premium paid for the policy by the annualized income benefit amount.

***The nonmedical financial loss provision is not available in all jurisdictions. See policy for complete information on financial loss.

****CDs are FDIC insured up to $250,000 per deposit. At the end of the maturity term, the full investment amount of the CD, plus interest, become available again, whereas with an income annuity each payment includes both interest and return of premium.

For most jurisdictions, the policy form number for the New York Life Guaranteed Lifetime Income Annuity is ICC11-P102; it may be 211-P102 and state variations may apply.

For most jurisdictions, the policy form number for the New York Life Guaranteed Future Income Annuity is ICC11-P100; it may be 211-P100 and state variations may apply.

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