Guaranteed Future Income Annuity: Product Details
Create a Steady Stream of Retirement Income
What is the Guaranteed Future Income Annuity?
New York Life’s Guaranteed Future Income Annuity is a deferred income annuity designed to provide a stream of income beginning at a future date. It can help individuals build a retirement strategy on their own terms through a customized stream of income payments that will last their entire life. Clients choose when payments begin (anywhere from two to 40 years1 after the initial premium payment) and they can change that date to suit their needs. They also can continue adding funds. The annuity also has the option of income for life for one person or for a married couple2. Payments can be accelerated if the annuitant has unexpected short-term cash needs3.
A GFIA provides:
Flexibility: A guaranteed income stream tailored to help meet specific retirement needs
Security: An income stream that is not subject to stock or bond market risk; backed by New York Life’s top rated financial strength. Individual third-party ratings reports. As of 8/8/11 New York Life Insurance Company (NYLIC) and New York Life Insurance and Annuity Corporation (NYLIAC) have the following ratings for financial strength: A.M. Best, A++; Fitch Ratings, AAA; Moody’s Investors Service, Aaa; Standard & Poor’s, AA+.
Simplicity: A worry-free stream of income to help cover expenses without recurring fees.
Longevity: A stream of income guaranteed for life.
Who is best suited for this product?
A GFIA can be a good fit for people who are nearing retirement or recently retired, mainly between the ages of 50 and 64 and who don’t need income now.
Here are a few scenarios where a GFIA might be a great fit:
Build Your Own Retirement For individuals who are still working and want to create their own “pension-like” retirement income.
401(k) rollovers For individuals with money in 401(k) account sitting at former employers.
Longevity Protection For retirees looking to protect their retirement plans should they live beyond their life expectancy. Income payments can start at an advanced age, allowing you to live life to the fullest without worrying about income in your later years.
What’s the minimum premium?
The minimum initial premium is $5,000 with subsequent premiums having a minimum of $100, which can be made at any time, up to two years before the payment start date.
Additional premiums earn a payout rate based on the rate of interest in effect at the time they are made.4
Is the first payment date set in stone?
No. There is flexibility. There’s always the unexpected in life. Someone might decide to retire earlier than originally expected or to continue working longer than they planned.
Annuitants can accelerate the income start date to any date that is at least 13 months after the latest premium payment, and can also defer their income start date, but no longer than five years from the original start date.5
Inflation is a big concern in planning for a future retirement. Will the Guaranteed Future Income Annuity keep up with inflation?
There’s an option to have income payments increase annually by 1 to 3 percent. This helps mitigate the effects of inflation as living expenses increase over time.
Must be elected at time of purchase Policyowner must be at least 59½ at the time of the first income payment Income payments for the same premium amount will initially be smaller than policies without this feature and will increase each year at the percent chosen.
Can you give me some examples of how the product works?
Sure. Heather is 54 years old and 10 years away from retiring from her job. She doesn’t have a pension, but plans on retiring in 10 years and wants her income payments to start then. She decides to place $10,000 annually into the annuity. So, by the end of 10 years, she will have $100,000, which will generate a guaranteed stream of income to last the rest of her life. For non-qualifi ed policies, premiums do not have the same tax advantages as qualifi ed retirement plans such as 401(k)s and IRAs.
Bob and Marsha, in their late 50s, are both currently working, but nearing retirement. They’ve been busy paying for their children’s college and are worried they haven’t saved enough to last their entire retirement. They decide to take $100,000 of their assets and place it in a Guaranteed Future Income Annuity, select a joint annuity option, with payments beginning when they retire at age 63. The annuity will ensure they have enough money to last for both their lives. Blake job hopped a lot throughout his career. The 53 year old diligently contributed to a 401(k) at each employer and now has four different 40(k) accounts. Now that he’s close to retirement, he’s decided to consolidate the accrued funds in a Guaranteed Future Income Annuity and begin payouts in two years.
What Income Payment Options are available?
The GFIA has several income payment options. Not all payment options are available for all ages and circumstances. Product and features available in jurisdictions where approved.
Here are the options:
Life Only: Provides income payments beginning on the income start date and guaranteed for one life (or two lives for a Joint Life Only policy). Generally provides maximum lifetime income per premium payment. Payments stop at the annuitant’s death. For the Joint Life Only option, income payments continue as long as one annuitant is alive, and stop at the death of the last surviving annuitant. There is no death benefit. Available on non-qualified contracts only.
Life with Period Certain: Provides income payments beginning on the income start date and guaranteed for one life (or two lives for a Joint Life policy), or for a guaranteed period (10 to 30 years, chosen at time of purchase), whichever is longer. If the annuitant (or either annuitant in a Joint Life policy) lives beyond the guaranteed period, payments would continue as long as the annuitant is living.6 If the annuitant (or both annuitants in a Joint Life policy) were to die prior to the end of the guarantee period, income payments would continue to the beneficiary(ies) for the remainder of the guarantee period.7
Life with Cash Refund: Provides income payments beginning on the income start date and guaranteed for one life (or two lives if a Joint Life policy). This option guarantees that, if the annuitant (or both annuitants for a Joint Life policy) dies before the income payments received equal the premium paid, the beneficiary(ies) will receive a lump sum equaling the premium less all income payments received.8
Life with Installment Refund: Provides income payments beginning on the income start date and guaranteed for one life (or two lives if a Joint Life policy). This option guarantees that, if the annuitant (or both annuitants for a Joint Life policy) dies before the income payments received equal the premium paid, the beneficiary(ies) will continue to receive the scheduled income payments until the premium is fully recovered.7,8
Death Benefit Prior to Income Start Date: With a Life Only policy beneficiaries receive no death benefit if the annuitant dies before the income start date. For more details see the product brochure.
* New York Life’s Guaranteed Future Income Annuity issued by New York Life Insurance and Annuity Corporation (NYLIAC) (a Delaware Corporation) a wholly owned subsidiary of New York Life Insurance Company. Available in jurisdictions where approved. Guarantees are subject to contract terms, exclusions and limitations, and the claims paying ability of New York Life Insurance and Annuity Corporation (NYLIAC) (a Delaware Corporation), a whollyowned subsidiary of New York Life Insurance Company. This contract 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 designated income start date. Contracts in which a Life Only payout option is selected do not provide for payments to beneficiaries either prior to or after the designated income start date.
1. For Life Only policies, if annuitant is age 71 or older, the maximum deferral period is 5 years
2. For the Guaranteed Future Income Annuity, Joint Owners must be Joint Annuitants and “spouses” as defined in the federal Defense of Marriage Act (DOMA). Under DOMA, same-sex marriages currently are not recognized for purposes of federal law. Therefore, the favorable income-deferral options afforded by federal tax law to an opposite-sex spouse under Internal Revenue Code sections 72(s) and 401(a)(9) are currently NOT available to a same-sex spouse.
3. Payment Acceleration (For Non-Qualified Policies with Monthly Payments): Enables policyowners, after the income period has begun, to receive the next scheduled monthly payment, along with six subsequent payments — for a total of seven months of income payments paid in one sum. When this option is exercised, income payments will not be paid for the next six months. Policyowner must be at least age 59½ to exercise the Payment Acceleration option. May be exercised three times during the life of the policy.
4. If the initial premium or the sum of all premiums exceeds $3 million, approval from New York Life Insurance and Annuity Corporation is required. For qualified policies, the ability to make subsequent premium payments depends upon satisfying IRS Required Minimum Distribution (RMD) rules. New York Life will not accept additional premium payments that would result in a violation of IRS RMD requirements.
5. Not available on Life Only policies. The new income amount will be adjusted based on the Moody’s Seasoned Baa Corporate Bond Yield (DBAA) rates, A2000 mortality tables and an Interest Rate Change Adjustment. For qualifi ed policies, changes to the income start date may be limited due to IRS Required Minimum Distribution (RMD) rules. For qualifi ed contracts, all accelerations of 5 years or less are guaranteed to satisfy IRS RMD Rules. Accelerations must be at least 13 months from your last premium payment. Deferrals of your income start date are up to five years from your original start date. Guarantee not available for policies where the Annual Increase Option has been selected.
6 If a Joint Life with Period Certain policy provides for reduced income upon the death of the first annuitant, the reduction in income will not take place until the first annuitant’s death or the end of the guaranteed payment period, whichever is later.
7 Upon death of the annuitant (or both annuitants for a Joint life policy), remaining guaranteed payments can be commuted into a lump sum if the policyowner selected this option at contract issue.
8 If the total payments received prior to annuitant’s death equal or exceed the premium paid for the policy, no payments will be made to beneficiaries upon death.