You can buy this type of annuity right before you retire, or when you’re already retired. These annuities guarantee payments after you reach a certain age, typically when you reach the age of 75. If you buy longevity insurance at 65 with an initial deposit of $50,000, you may be able to receive a thousand dollars per month after ten years, or one-and-a-half times that amount if you start withdrawals at the age of 80.
The upside of longevity coverage is the larger payments involved if you buy it at a younger age, partly due to the longer time the insurer has the money for investment. If you invest in longevity insurance at 60 and pay $50,000 up front, you can get $1,300 once you reach 75, or more than $2,000 five years later.
If you add another person to your annuity contract, you’ll receive lower monthly payments, much like immediate annuities. Some policies will give designated beneficiaries the initial investment, plus interest, if the buyer dies before receiving payments.
Considering longevity insurance to augment your retirement funds with guaranteed regular income? Think about adding other investments or withdrawal plans for the time that you aren’t eligible for payments yet. If you buy this annuity, you can also make full use of it in the latter part of your retirement, which is typically when you’ll need extra money to pay for the costs of assisted living or health care. Consult with your financial advisor for help in choosing the best insurance for your particular financial situation that meets your needs and goals.