Deferred Income Annuities Gaining Popularity According to LIMRA
by Hersh Stern - Revised Saturday, November 11, 2023
A recently released LIMRA study found there is a growing interest among consumers for deferred income annuity ("DIA") products also known as "longevity annuities." In 2012, consumers purchased over one billion dollars in deferred income annuities.
If you want to set up a guaranteed income stream today which starts paying you at a specific future date or future age (say, when you reach 65), then you might consider buying a DIA longevity annuity. A DIA is an advanced life-delayed annuity which is similar to an immediate annuity but with income payments to the policyholder postponed for more than a year. A typical immediate income annuity, on the other hand, begins payments to the buyer one month after purchase.
An immediate annuity is a great product if you are looking for an income stream that starts immediately. A DIA would be more appropriate if you were interested in guaranteeing a steady income stream later in your life.
The LIMRA study found a number of additional differences, as well as some similarities, between immediate income annuities and DIA-longevity annuity products.
Several Contributions - Deferred income annuities allow you to make multiple contributions to the account before the income stream start date arrives. Four of the seven products surveyed allowed additional contributions. This is a major difference from immediate income annuities, which are “single premium” products that do not allow further contributions.
Income Stream Start Date – As the name suggests, immediate income annuities start paying immediately. A longevity annuity product lets you pick from a wide range of income start dates. The majority of DIA products let you defer the income start date from as short as 13 months all the way up to 45 years.
Increased Liquidity – A number of the liquidity options available in an immediate income annuity are also available in longevity annuities. The survey found that three out of the six companies were offering an accelerated payment option and two of the six were granting access to guaranteed payments.
Flexibility With Income – The majority of the deferred income annuity products surveyed offered a cost of living adjustment as an option. None of the DIA’s are currently linking payments to the Consumer Price Index.
Deferred income annuities are a great way to ensure you have a safe and steady stream of income in retirement and the ability to delay the income start date allows for a high degree of control in your retirement planning.
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This is a monthly annuity calculator. It calculates the amount of monthly income you will receive in return for a specific "Investment" (aka Premium). Premium is the purchase amount you pay to the insurance company. With this calculator you can also find what Premium would be necessary in order to receive a specific monthly income amount. To use the annuity calculator, simply select your age, state, and gender. Enter a dollar amount in only one of the two boxes labeled "Investment" or "Monthly Income." Then, choose an income start date. Click "Calculate" and you will see a table with annuity quotes. Feel free to call 800-872-6684 if you have any questions about annuities or your quotes.