Annuity contract?

Question

Do annuities contracts sold by insurance companies always contain a spendthrift clause?

Answer 1

No such thing. It is not up to the insurance company to monitor how money is spent.

Annuity contracts can be "annuitized" meaning that the payout can be structured so that payments are monthly for a specified period of time.

Answer 2

The annuity payout is a form of spendthrift protection itself.  

However, if you are worried about the annuitant signing over his future income from that annuity, you better have a long talk with the agent prior to signing the contract.

If you are really concerned about protecting a recipient, you can form a trust.  That trust may be administered by a large (& stable) bank.  The annuity payments can go to the trust if the company allows this.  The trust can have any limitations and protections you require.  

Your agent can help  you.   If you do not have one, contact a CLU (Chartered Life Underwriter).   This is a very tough designation to obtain.  The holders are very knowledgeable.

Good luck!

P.S.  Pay attention to the advice granted above.

Answer 3

Be carefull of "annuity" contracts.  Most "variable annuities" are sold to the wrong investors.  They're a great source of income for the agent.

Tax defferal benefit is lost because;

Very high hidden fees

Tax rate at "earnings" rate instead of capital gains rate.