Can Annuities Be Inherited: Should You Leave Your Money To Someone Else

Dec 15, 2021

People who use annuities to plan for retirement want to know that the money they’ve worked hard to save will be there when they need it. Nonetheless, most people don’t know that annuities can be passed along to their heirs. 

Annuities can be inherited, but there are a few key details that you should understand. When you work with an annuity specialist at The Modern Medicare Agency, we can help you sort through all the facts and answer any questions about how this financial product works.

What is an annuity?
An annuity is a type of insurance contract. An insurance contract is similar to a stock investment because both require you to have a level of investment to profit. Nonetheless, an annuity can’t be traded or sold, like stocks. 

You can’t use the money you have in your annuity to make a profit in another form of investment. Instead, the money you have in your assistance is locked up, and the company that owns the annuity will keep the entire amount as long as you live. 

As long as you keep paying the annuity company the premiums, the money will be there to give to your family when you die.

How does inheritance work in annuities?
With annuities, you buy an agreement with an insurance company or “insurer.” There are no fees if the annuity is under $1 million in value, so your savings are completely tax-free.

In this case, you can’t pay back the money to your estate because they are non-transferrable. If the annuity is over $1 million in value, there will be an initial “transfer fee” that you will have to pay.

Things to keep in mind about the inheritance
It is important to understand the rules and options for this process before you do it. Even if you have very specific instructions and insurance forms, your beneficiary cannot make any changes to your annuity unless it’s an immediate family member or spouse. 

Your circumstances may also affect how the inheritance goes through. You’ll need a power of attorney to make any of the decisions required to follow this procedure.

It cannot be easy to plan for a comfortable retirement. As you can see, there are several issues you should consider before buying an annuity. Working with a licensed financial planner can help you determine what steps you should take, including the inheritance.

At The Modern Medicare Agency, we put our clients first by offering them policies that they can afford. Having insurance is a necessity nowadays, and we’re here to help you out. Learn more about our products and services by calling our agency at (631) 358-5793. You can also request a free quote by CLICKING HERE.