Annuities FAQs

Can an annuity be transferred into a whole life insurance policy?

No, an annuity cannot be transferred to a whole life insurance policy. Annuity payouts can be used, after tax, to pay whole life insurance premiums, but an annuity cannot be transferred tax-free to a life insurance policy.

Can a whole life insurance policy be transferred into an annuity?

The cash value of a whole life insurance policy can be used to purchase an annuity, but a direct life-to-annuity exchange depends on the insurance carrier and will likely cause a forfeiture of the death benefit of the policyholder’s whole life insurance policy.

In the event a policyholder is able to transfer a life insurance policy to an annuity, the amount of the premiums paid toward the whole life insurance policy will be tax-free upon withdrawal from an annuity, and the policyholder won’t be taxed for transferring the cash value of the whole life insurance policy to an annuity, per the Section 1035 Exchange tax provision. For help setting up an annuity, speak with a Wealth Strategist.

What are the benefits of an annuity?

  • Annuities grow tax-deferred
  • Annuities provide guaranteed income not found with typical mutual funds
  • Annuities don’t have annual contribution limits
  • Annuities allow you to catch up on retirement savings
  • Annuity payments can be structured to last an entire lifetime
  • Some annuities offer death benefits to a beneficiary

How soon can money be withdrawn from an annuity?

Annuity withdrawals may begin starting at age 59 ½. Withdrawing before age 59 ½ will subject the annuity owner to an early withdrawal penalty. An annuity can be structured for immediate income or it can be deferred for later use. The decision of when to withdraw money from an annuity is up to the owner. Speak with a Wealth Strategist to customize an annuity that fits your needs.

What happens when an annuity owner dies?

Like life insurance, the money in an annuity may be transferred to a beneficiary upon the death of the owner, either in a lump sum or in a stream of payments.

How much does an annuity cost?

The cost of an annuity depends upon the type of annuity purchased, the payout period, and the amount of income the owner wishes to receive from their annuity, among other factors. For help purchasing the right annuity for your unique needs a goals, schedule a complimentary consultation with a Wealth Strategist.

What are annuities?

Annuities are accounts that can provide income for the rest of the owner’s life, protected against market losses. An annuity may be used for immediate income or deferred for later use after 401(k) or IRA money has run out.