12 Things You Need to Know about Income Annuities

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.

A single premium immediate annuity, such as New York Life’s Guaranteed Lifetime Income Annuity¹ 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.” 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.

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 more than 168 years, NYLIAC and 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 2/1/2013.)

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.*

Answer: 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.

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Answer: 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.

Answer: A Guaranteed Lifetime Income Annuity is not an investment that provides you with a rate of return over a fixed period of time, like a CD****. Rather, this annuity is 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.

Answer: Income payments generally begin one payment period after the policy date. If you choose to receive a monthly income, your payments will begin one month after the policy date, whereas if you choose to receive a quarterly income, payments will begin three months after the policy date. You may select the start date for receiving payments, but payments must begin within one year of the policy issue date.

Answer: For non-qualified funds, owners and annuitants must be younger than age 96. For tax-qualified funds, owners (primary annuitants) must be between the ages of 18-89, and joint annuitants must be younger than age 90. No medical history is required. Additional age restrictions may exist depending on specific benefits selected at time of purchase.

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 a single lifetime income annuity, however, tax-qualified and non tax-qualified funds may not be commingled.

Answer: You can purchase an income annuity with any amount of $10,000 or more, though premium payments of $5 million or more requires prior New York Life Insurance and Annuity Corporation approval. (Includes aggregate premiums from multiple policies).

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

Answer: Money used to purchase A New York Life Guaranteed Lifetime Annuity will be permanently locked into the contract and can only be returned in the form of monthly 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.

Up to 100% Cash Withdrawal Feature** allows the policy owner, after age 59^1/2 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.

40% Cash Withdrawal (based on life expectancy)** allows you a one-time withdrawal of 40% 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, non-medical 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.