Help me understand my mother’s annuity?

[cricketwife]

My mother has Alzheimer’s; I have POA.  Her husband/my stepfather passed last October.  I have been managing everything. Today I discovered an annuity contract that I was unaware of.  It’s outside of her main financial portfolio.  I have so many questions -  please help me with any if your can. 

Here’s what I think are the important details. I have the contract so I can answer other questions, if needed. 

My mother is listed as the annuitant and owner.  My now deceased stepfather is the co-owner/co-annuitant.  My mother is also listed as beneficiary.

Is her being the beneficiary a problem if/when she dies?  Should it be her kids?

The contract was written when she was 71 (?!) and matures when she would be 95 (?!).  I’d don’t understand the logic of this at all.  

#2) what the benefit would be of this maturing at an age they would expect her to be dead, even when they took this out?

$70,000 -initial premium paid 
Surrender charge period - 8 years 
maximum ownership age change 80 

At this point, she’s had this for 5.5 years.  She is unlikely to live more than another 4-5 years, and I think that’s on the high end. I do not believe she is receiving in any payments at this time.  It looks like she would get a payout at 95.  What happens in between?  Is she supposed to be getting payments?  Do they start at 8 years in?  

is there anything I can do to “maximize” this for her? 

[aprilsails]

I would reach out to the company to confirm the contract and to inform them of your stepfather's passing and find out what paperwork needs to be amended.

Generally an annuity can start to be withdrawn without penalties after the surrender period is expired. So this is a lump of money they set aside at age 71 to ensure she had some source of accessible income between the ages of 78 to 95.

The beneficiary would be the person the annuity pays out to in the event of death of the owner. I do think that should be amended at this time, otherwise it will pay out to the estate when she passes and will have to go through that whole process before being distributed to any heirs.


If you need the funds in advance of the surrender period there may be a fairly large penalty. I don't know if or how this applies in the event of death of the annuitant. All monies taken out of the annuity are taxable.

I'm not certain if this was a financial product that your parents set up to guarantee your mother's income or if it was also to support your stepfather. It appears by the way it was set up that it was designated for your mother. Did they have a financial planner or advisor you know of that helped them make these decisions?

[cricketwife]

aprilsails, thank you for your reply!

They did have a financial planner and that is product is from a difference company and different person, that’s why I really don’t know what prompted it. They always worked under that assumption that my mom would live longer, and they were right on that count. I spent last night on YouTube trying to learn about annuities. Theirs is a jointly owned index annuity and so it is actually good that my other is the beneficiary because (if I understand correctly), if the surviving spouse is not the beneficiary, the death of any owner forces you into withdrawal. I do agree that I need to notify them of his death and then change the beneficiary. What I’m still not clear on is whether a beneficiary will get the residual payout if she dies once it is annuitized. Basically, I’m trying to see the best way to get her money out- wait until we hit 8 years, so there are no penalties, or just do it now, so we don’t potentially lose more money. My other is not going to live long enough to draw from this for more than a year or two. And I don’t want to lose this one if she passes before we get to the 8 year mark.

I also saw that I could withdraw without penalty if she was in a nursing home, but she is in assisted living and doesn't qualify for a long term care facility yet.

[dr.girlfriend]

I'm sorry, I don't know anything about annuities but I just wanted to send my (ignorant) support. That sounds like a huge amount of stressful stuff you have to deal with and manage, and I hope you have some help working it out.