How to Process Annuities
- 1). Get information about the annuities your chosen life insurance company sells, and look over various policy designs. A deferred annuity is a long-term savings contract. If you don't have a lump sum of money or you have a lump sum of money but do not need retirement income right now, then use a deferred annuity. If you are retired and need income and have a savings, use an immediate annuity.
- 2). Fill out the application for the annuity policy. Your application will ask for your age and the amount of money you want to give to the insurance company. For deferred annuities, you will usually have to make a minimum deposit. The minimum deposit varies from company to company. For immediate annuities, a large lump sum of money is required.
- 3). Write down a beneficiary on your application. When filling out the application for both deferred and period certain annuities, don't forget to name a beneficiary. If you fail to name a beneficiary, the proceeds you do not use will be transferred to your estate and must pass through probate. The annuity's beneficiary option allows you to bypass probate and give any unused funds in the annuity to a person or organization that you want to receive the money.
- 4). Submit your application. The insurance company will typically process the application within four weeks. If you are applying for an immediate annuity, you'll receive your first annuity payment within four weeks. If you are applying for a deferred annuity, you'll receive your annuity contract in the mail from the insurer within four to six weeks, depending on when you deposit your first check with the insurance company.
- 5). Send money to the insurance company. Your insurer won't pay interest on your deferred annuity and won't make payments from an immediate annuity until it has money from you. A deferred annuity may have the option for regular contributions. If so, decide on the amount you would like to contribute monthly to the annuity. The insurer may also allow you to make contributions via ACH withdrawals from your bank account. Immediate annuities allow you to take payments over your lifetime or for a set period of time. Lifetime payments do not allow you to give your annuity to a beneficiary. Period certain or temporary annuities only make payments for a set number of years. Because of this, you may choose a beneficiary to receive the payments if you die before the end of the payment period.
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