Longevity insurance is now the most talked about new wrinkle for estate and financial planning.
Started in the UK and now moving into the US, deferred annuities are being described as longevity insurance. While the description is accurate, the product ” longevity insurance” does not exist.
What the insurance companies are doing here are opening up a path for those that are seeking security in their old age . You invert money now in a deferred annuity, which is a life annuity that starts payments somewhere down the road.
This brings up the problem of longevity just how long are you and your spouse planning to live. If you are 65 and defer payments to age 80, will you still be able to enjoy the money? Or are you buying this deferred annuity so that you are sure that you will have some funds to buy some type of home or medical care?
And another problem you must consider with this longevity insurance ; will you still be alive at the first income date?
And the last remaining problem we see is whether you are able to access the monthly payments earlier if necessary, albeit at a lower income?
So if you are inclined to consider this product, make sure you have considered answers to these longevity insurance questions.