The spotlight has been on deferred income or longevity annuities of late, with new regulatory guidelines that allow them to be included in qualified default investments for workers age 55 and older.
Traditionally, DIAs don’t pay benefits right away but are designed to start paying out at an older age so that the annuity holder doesn’t run out of income during retirement. Often they’re set to begin payouts at age 80 or even beyond, as longer lifespans mean more time spent in retirement — and a greater need for cash to live on for a longer period of time.
But that’s not always the case. Sometimes people need that income earlier on, although not at the time of purchase of the annuity — and sometimes they find that their needs have changed.
With all of that in mind, Lincoln Financial Group has made some changes to one such product that provides the annuity owner with some additional flexibility.
The Lincoln Deferred Income Solutions Annuity now offers, among other features, a shorter minimum deferral period and flexible premium options.
The change in premium options is aimed at allowing annuity owners to increase the amount of their future income stream by spreading premiums over multiple years at any frequency. They also now have flexibility in determining when that income stream will begin, and can choose to have it start as little as 13 months after purchase. This, said the company, allows early retirees to have some income while they wait for Social Security benefits or other income to kick in.
Annuity holders will know how much to expect in each check at the start of the contract, but with the new modification, they can adjust that upward with each additional premium payment that’s made at least 13 months before benefits begin.
The Lincoln deferred income annuity also offers optional death-benefit protection during the deferral and income phases.
In addition, anyone who owns one of these annuities can choose to accelerate or to delay the payment start date during the deferral phase of the contract, which can come in handy if life interferes with their planned retirement date.
He or she can also, during the income phase, opt to receive six months of income at once — something that can be beneficial in the event of a medical or other emergency when no other funds are available.