Becoming a grandparent is certainly a pinnacle to most that are fortunate to achieve this status. From the first time you hold that new family member, it’s instinctual to wish that everything will be taken care of for the rest of their lives.
For many, life insurance is the ultimate way to leave a legacy, but many grandparents are not able to qualify through the underwriting process. Fortunately, there are some annuity strategies that can provide a legacy to your heirs without requiring any medical testing.
Guaranteed issue regardless of health
Annuities with guaranteed legacy benefits are issued regardless of your current or past health issues. The only potential hurdle is the age limitation of the specific carrier and specific product offering the legacy guarantee. With most annuities, the age limit for issue is 80, with some as far out as age 85.
No medical exams required
When applying for typical life insurance coverage, you have to provide your medical records, go through a physical exam, and even provide blood for testing with most products. None of these potential hurdles are required for annuity legacy strategies.
Contractual legacy growth rider benefit
Some annuities offer an attached death benefit “rider” that you can add to the policy at the time of application. This rider will contractually guarantee an annual percentage growth that can be used as a death benefit. For example, a 5% rider will compound by that amount tax deferred until your death. That total will then pass to the listed beneficiaries on your annuity policy.
Unlike life insurance where the death benefit proceeds pass tax free to the beneficiaries, annuity death benefits are taxable as part of your estate.
The highest contractually guaranteed death benefit riders offered are attached to fixed annuities. This means that your principal is fully protected from any market downside, as well as the attached death benefit rider. There’s no volatility, just contractual guarantees.
When you set up your annuity legacy plan, you can list as many beneficiaries on the policy as you desire. You can choose the percentage of the death benefit that each will receive, and you can change beneficiaries or percentages at your discretion.
Most annuity legacy riders’ payout the death benefit over a 5 year period, which is in line with IRS rules and also spreads out the tax burden as well.
So if you cannot qualify for life insurance, or do not want to go through the underwriting process, maybe an annuity legacy strategy is an easy way to give the ultimate Grandparent gift.
If you’d like to learn more about annuities (and who doesn’t?) just click on the link or book cover below to get a free copy The Annuities Stanifesto
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