Annuitization

What this video covers

• Why annuitization is irrevocable and what that means for contract owners who want to change their mind later
• How to rank the four payout options by periodic payment size: life only (highest), life with period certain, unit refund (cash refund), then joint and last survivor (lowest)
• Why more protection for beneficiaries or additional annuitants always reduces the periodic payment, because the insurance company assumes more risk
• The critical difference between period certain (time-based guarantee) and unit refund (dollar-based guarantee)
• How the fixed number of annuity units locks in at annuitization while the variable dollar payment fluctuates with annuity unit value
• What the Assumed Interest Rate (AIR) is, why it is set at annuitization and never changes, and how it serves as a benchmark rather than a guaranteed minimum return
• The three outcomes of separate account performance versus the AIR: payments increase (exceeds), stay level (equals), or decrease (falls below), and why matching the AIR produces level payments, not increasing ones
• The tradeoff between choosing a higher AIR (bigger initial payment, harder to beat) versus a lower AIR (smaller initial payment, easier to increase)