What Will Be Covered in this Review?
In this review, we will be discussing the following information regarding the MetLife Retirement Income Insurance QLAC:
- Product type
- Current rates
- Realistic long-term return expectations
- How it is used
- How it is most poorly used
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We make the complex, simple.
If you are inching ever closer to retirement, but you still are not sure that you will have enough income to get your through – particularly if you have a long lifespan – then you may want to consider a strategy that will allow you a guaranteed stream of income in the future, along with some nice tax-related benefits now.
Throughout the past several years – and particularly as life expectancy has increased overall – one of the biggest worries that retirees and pre-retirees have is not having income when they need it during their golden years.
Given today’s uncertain market and economic environment, there are many investors who don’t know where to turn with their money in order to ensure that they will have enough income in retirement. However, one relatively new income generation strategy that some have started using is the QLAC or Qualified Longevity Annuity Contract.
A QLAC is a deferred annuity that is funded with an investment from a qualified retirement plan or an IRA (Individual Retirement Account). The annuity provides guaranteed monthly income for the remainder of your life – regardless of how long that may be – and, provided that the annuity you choose is in compliance with IRS requirements, it will also be exempt from the RMS (required minimum distribution) rules until the income payouts start (following the set income start date).
These financial vehicles were created by the IRS as a way of allowing retirees a lifetime income stream later in life, while also following the RMD (Required Minimum Distribution) rules (which require that people start taking withdrawals from traditional IRAs and other qualified retirement accounts by the time they turn age 70 1/2).
However, as great as this might sound, before you go out and set up a QLAC for yourself (and for the benefit of your spouse, if applicable), there are some things that you need to know – beginning with whether or not the annuity you choose to use for this strategy is the best fit.
There is where the Annuity Gator can come in.
Annuity and Retirement Income Planning Information You Can Trust
If this is your very first visit to our website, allow us to welcome you here to AnnuityGator.com. We are a team of experienced financial pros who are highly focused on offering the most comprehensive, and unbiased, reviews of annuities. We’ve been at this for many years – much longer than our competitors, and so we have become a well-known source of annuity information.
With that in mind, if you’ve been in the process of looking for more information about annuities via the Internet, then it’s a good possibility that you have noticed there’s a lot of conflicting information out there about these products. This, however, isn’t really a surprise, because there is also a great deal of confusion about how they work, and which type may be best for certain circumstances.
But even though there are a plethora of websites that market their annuities to consumers, there are a fair number of these sites that will attempt to “lure” you in by making very enticing claims like:
- High-income payments
- Lowest annuity fees
- Guaranteed lifetime income
- 7 – 8% Rate of Return
While these claims can be inviting, the truth is that it is absolutely essential that you first make sure that they are actually true. This is particularly the case if you are seriously thinking about moving a large sum of your retirement savings into one of them.
In any case, whatever the reason is that you landed here on our AnnuityGator.com website, you are definitely in the right place if you want to find out more about the MetLife Retirement Income Insurance QLAC.
That’s because we provide all of the details and resources, including not just the good, but also the bad and the ugly. This is really the only way that you will be able to make a truly well-informed buying decision (or alternatively, making the decision to pass on this annuity, and move on to something else that may be more suitable for your specific financial goals).
In order to be perfectly clear here, we want to state for the record that we at Annuity Gator feel that annuities can be good products for some people – as long as they fit in with your overall financial needs and goals.
So, if you’re ready to start the review, let’s dive in!
The MetLife Retirement Income Insurance QLAC at a Glance
|Product Name||MetLife Retirement Income Insurance QLAC|
|Type of Product||Qualified Longevity Annuity Contract (QLAC)|
Opening Thoughts on the MetLife Retirement Income Insurance QLAC
With more than 145 years of experience in the insurance and financial services arena, MetLife possesses a strong and stable presence in terms of financial stability and reputation for serving its clients. The company is a leading innovator and a recognized leader in protection planning, as well as retirement and savings solutions around the globe.
Today, MetLife has a strong presence in nearly 50 countries – and the company continues to grow via expansion of its product lines, as well as through mergers and acquisitions. MetLife currently serves approximately 100 million customers worldwide, and its products are trusted by more than 90 of the top 100 Fortune 500 companies in the United States.
MetLife is a leading provider of institutional income annuities, and it was the first company to introduce longevity insurance into the marketplace back in 2004. This helps MetLife to be uniquely positioned to offer a wide range of benefits to plan sponsors and participants, such as:
- Consistent Income – This allows individuals to create a guaranteed income stream that is payable later in life, when other retirement income sources may run out.
- Flexibility – This provides individuals with an opportunity to use qualified plan money to buy a QLAC with an income payment start date that works best for them
- Protection – This helps individuals to navigate longevity risk by providing income that lasts a lifetime.
- Security – Security allows individuals to better manage their retirement portfolios and future – knowing how much income they will receive at their selected income payment start date.
Before we get into the gritty details, here are some legal disclosures…
This is an independent product review, not a recommendation to buy or sell an annuity. MetLife has not endorsed this review in any way, nor do we receive any type of compensation for providing this review. This review is meant to be an independent review at the request of readers so that they may see our perspective when breaking down the positives and negatives of this particular annuity. Prior to purchasing any type of investment or insurance product, it is important that you do your own due diligence and that you consult a properly licensed professional if you should have any specific questions that relate to your individual circumstances. All names, marks, and materials that were used for this review are the property of their respective owners.
For more information on how to compare annuities in order to determine which one may be right for you, click here to obtain our free annuity report.
How MetLife Describes the Retirement Income (RII) QLAC
MetLife describes the Retirement Income Insurance, or RII, QLAC as a product that protects individuals from outliving their money.
In July of 2014, the United States Treasury issued final regulations on qualifying longevity annuity contracts, or QLACA, which are a form of deferred income annuity (DIA) that allows participants to do the following:
- Defer a portion of their guaranteed income payments to a later age, and
- Reduce their defined contribution plan balance subject to required minimum distribution (RMD) rules.
Deferred income annuities (DIAs) are sometimes referred to as “longevity insurance” because they are essentially designed to provide income later on in retirement – typically between the ages of 80 and 85. These financial vehicles protect against the possibility of outliving retirement assets, and they can also help to ensure your financial independence in later years.
The previous regulations prevented defined contribution plan participants (such as those who have a 401k plan) from benefitting from longevity insurance annuities, as they could not defer their income start date beyond age 70 1/2.
Now, the portion of the defined contribution plan balance that a participant uses to purchase a QLAC will be excluded from the account balance that is used to determine the required minimum distribution, and participants can defer their income payments to a later age.
For a participant, this can mean the following key benefits:
- A longer deferral period – and in turn, a higher income amount when the payments from the QLAC begin.
- A reduced required distribution – which equates to less reportable income.
- Protection against longevity risk, which the remaining assets in the defined contribution plan may continue growing over time.
The MetLife Retirement Income Insurance QLAC can also offer lifelong income for a spouse or other individual for as long as that person lives, too. And, should the death of the annuitant occur before the annuity has been converted over into an income stream, then the amount that has been paid into the annuity will be provided to a named beneficiary.
Likewise, this product also offers a return of premium guarantee in that if the participant passes away after the income payments have begun – but before they have received back the full amount that was paid in as premium – then the remainder of the premiums will be paid to the policy’s beneficiary (or beneficiaries, if there is more than one).
Unlike some of the other QLACs that are out in the market today, the MetLife Retirement Income Insurance QLAC also offers inflation protection on the income stream. This feature will increase your income payments each year in order to help keep pace with rising inflation. The increase may be by 1, 2, or 3 percent each year.
How an Insurance or Financial Advisor Might “Pitch” this Product
A primary fear today that is on the minds of those who are retired and approaching retirement is running out of money before “running out of time.” With that in mind, deferred income annuities that qualify as QLACs can provide both income and tax benefits, and can, therefore, be mighty appealing.
Because of that, it is likely that an insurance or financial advisor would key in on the lifetime income benefit you can get with this contract – as well as the added tax-deferred compounding that can occur with your savings, which can remain in the annuity long past your age 70 1/2.
Yet, even though this may seem like an ideal solution to many of your longer-term financial and retirement income concerns when something sounds too good to be true, it oftentimes is. For that reason, it is essential that you know the other side of the story, and what possible “tradeoffs” you may need to make in order to attain QLAC benefits.
For instance, there are certain parameters that QLACs must abide by, such as the following:
- Limiting premiums/contributions to the lesser of 25% of your balance, or $125,000
- A specified income start date that must begin on or before your turning age 85
- Annuity income payments that meet the applicable RMD rules
- No cash value, commutation benefit, or other similar features
The Annuity Gator’s End Take on the MetLife Retirement Income Insurance (RII) QLAC
Where this product works the best:
The Retirement Income Insurance (RII) QLAC can provide some nice benefit to those who:
- Anticipate a long lifespan
- Need lifetime income (for themselves and/or themselves and a spouse)
- Want tax-deferred compounding for a longer period of time (i.e., beyond age 70 1/2)
- Do not need income until later in life
Where this product works the worst:
On the other hand, this product may not fare so well for those who:
- Do not anticipate a long life (i.e., who may already have serious health issues)
- Want or need to start taking income at or before age 70 1/2
- Do not intend to use the lifetime income feature
In order to truly know how to compare the best annuity options for you, click here so that you can download our free annuity report.
If you have been thinking about purchasing a DIA (deferred income annuity) as a QLAC, then it is absolutely essential that you consider a number of key factors before moving forward. That way, you will have a much better idea as to whether or not the product is right for you and your specific needs.
If the MetLife Retirement Income Insurance (RII) QLAC appears to be the best option for you, then you can be assured that it will provide you with tax advantages, as well as a guaranteed income that you (and possibly your spouse) cannot outlive.
But even so, it is also possible that this financial vehicle may fall somewhat short – and that an alternative could be a better option for you. The only way to really know how this annuity could work for you is to have it tested. We can perform this testing for you, and provide you with a spreadsheet of the results. If this is something that you are interested in (free and with no obligation), then please just simply contact us here via our secure online form.
Do You Have Any Additional Questions? Did You Happen to Notice Any Mistakes in this Review?
While we realize that this review went a bit on the long side, our feeling is that we would much rather provide you with a little “too much” information about these products as versus not giving you enough.
This is especially the case with a confusing product/concept like QLACs. So, if you felt that this annuity review was helpful, then please feel free to forward it and share it with others who you think may also find it beneficial.
We also realize that the available information with regard to annuity products like QLACs can – and does – change over time. With that in mind, if you happened to run across any details in this review that needs to be corrected or updated, please let us know and we will be happy to get them corrected immediately.
Any other annuities that you would like to have us review?
If so, great! We are always happy to take suggestions of the annuity product that our site visitors would like to see reviewed. That being the case, just let us know the name (or names) of the products, and our team of annuity “geeks” will get right on it.
The Annuity Gator