Retirement

Leaving a legacy through life annuities: more than just retirement planning

Legacy planning is one of the most meaningful aspects of financial planning. It taps into a deep human desire – to leave a lasting impact and ensure our loved ones are supported even after we are gone. When financial professionals incorporate legacy goals into their planning strategies, they are doing more than managing assets – they are helping clients shape their life stories.

One powerful yet often overlooked tool in legacy planning is the life annuity. Traditionally viewed as just a retirement income product, a life annuity can also be structured to provide income for beneficiaries and serve as a legacy vehicle.

Legacy Planning with Confidence

Using a life annuity to leave an income legacy

When purchasing a life annuity, it is important to consider features that align with your legacy goals. These may include:

Single or joint life coverage:

For couples, joint life annuities ensure that the surviving spouse continues to receive an income after their partner passes away, offering peace of mind and continuity of income.

Income escalation options:

You can choose to have your income increase annually – either at a fixed percentage or in line with inflation – to help preserve purchasing power over time.

Guaranteed income periods:

This feature ensures that income payments continue for a set number of years, even if the annuitant passes away early. Some providers offer guaranteed periods of up to 25 or 30 years, providing income stability for beneficiaries.

Income reduction at death:

In the case of a joint life annuity, you can choose to reduce the income for the surviving annuitant after the first death.

EXAMPLE

Annuity benefits that extend to beneficiaries

Suppose an individual purchases a single life annuity with a 20-year guaranteed income term and passes away after five years. Their nominated beneficiaries would continue receiving income for the remaining 15 years or may choose to take the remaining payments as a lump sum. This lump sum represents the present value of the future income payments, offering flexibility to the beneficiaries.

BEYOND INCOME: YOUR LEGACY

Combining life annuities with life cover for a capital legacy

In addition to securing a lifelong income, you can also leave a capital legacy by combining a life annuity with a life cover policy. This approach allows you to receive a guaranteed income for life, while ensuring your loved ones receive a guaranteed lump sum upon your passing. The amount is determined at the policy’s inception, providing an extra layer of financial security for your family.

FINAL THOUGHTS

More than money

A life annuity is not just a retirement tool – it can be a powerful instrument for leaving a meaningful legacy. Whether your goal is to provide ongoing income or a capital amount, the right annuity structure can help you support your loved ones long after you are gone. By thoughtfully aligning your annuity choices with your legacy goals, you ensure that your financial plan tells a story of care, foresight and enduring impact.

Source: Glacier Financial Solutions (Pty) Ltd is a licensed financial services provider.

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