Almost all newer annuity contracts have a provision in them to allow access to all or most of your funds without penalty in the event of a need for a nursing home. The greatest fear of most senior adults is being confined to a nursing home and not being able to live in dignity. Annuity products have a rider that allows for access to your funds to finance this need and almost no one knows they have it in their contract.
For a long time, insurance companies have been looked on as insensitive and having all that small print in the contract. But this addition to annuity contracts provides an enormous benefit and guess what? There is no extra charge for it. The benefit is built into the pricing and crediting rate of your annuity!
The language that determines if this benefit is available to you and is very straightforward. As an example: in the event you are placed in a nursing home for six months and meet the other simple standards which a doctor will attest, the rider comes into effect.
One other benefit that annuities provide is the forfeiture of surrender fees at death. In the event, the annuitant passed away before the end of a surrender period the full account value of the annuity is paid to the named beneficiary. There are a few companies who do not provide this benefit.
Older annuity contract often restricted the assess to the funds without a penalty. Over time, the quality of annuity contracts has evolved allowing fresh and more useful benefits for annuity owners and beneficiaries.
It is important to fully understand the benefits as well as any restrictions in an annuity contract. Always as for a complete explanation of the annuity contract before making any final decision. It is a good idea to obtain a second opinion before purchasing the contract. However, all states offer a “free look” at the annuity during which the annuity owner can change their mind and receive a full and complete refund. Normally, the “free look” is 20-30 days or more.
Annuities can be wonderful product when used for specific benefit, but the restrictions in an annuity contract can also be an issue.