I am the beneficiary of some non-qualified, variable, deferred annuities; is there a way to put a "floor under the market" to protect against a downturn in the stock market?

I am the beneficiary of some non-qualified, variable, deferred annuities. The owner passed away in February 2018. The total value is $1 million. I have six options, varying from lump sum to annuitization. I think I want to annuitize. I would like to leave my beneficiary with guaranteed income, and preserve as much of the current value of the policy. Is there a way to put a "floor under the market" to protect against a downturn in the stock market?

Annuities, Stocks
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March 2018

Annuitizing with a joint and survivor feature accomplishes your goals of putting a "floor under the market" and allowing the income to continue for your beneficiary. Once annuitized, the account is no longer subject to market value fluctuations and the dollar amount you annuitize is locked-in to determine your guaranteed income stream. I would also suggest adding a cash refund feature, so that if something happens to both you and your beneficiary that someone else gets the remainder of the annuity's value. Otherwise, the insurance company gets to keep your money. 

If you opted against annuitization, bear in mind that variable annuities usually have a fixed interest rate option that will protect the principal from market losses. Do not choose the money market subaccount for principal protection because the variable annuity fees are typically higher than the interest earnings, therefore, your account value will slowly erode. 

For more helpful tips about annuities and other options to consider, you can learn more by reading about it here

 

March 2018
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