Annuities offer a feature called annuitization, where you can covert the contract value into an income stream. The decision to annuitize is a personal one, and should always be discussed with your financial advisor.
When you annuitize, you can turn your accumulated contract value into a stream of periodic payments, including:
- Payments for your lifetime
- Lifetime payments for you and another person
- Either of these two options with a "period certain"
Period certain means that in the event of death within a specified time frame, the remaining payments will be passed along to the beneficiaries.
For non qualified contracts, a portion of the annuity check will have an exclusion ratio. This means that each check represents a portion of principal (non-taxable) and a portion of earnings (taxable), which may be advantageous from an income tax perspective.
When you choose to annuitize, your income stream is dictated by the annuity option that you have selected, and you will no longer have access to your contract value. Also any optional benefit you selected with your contract, including death benefits, will end.
Neither John Hancock Life Insurance Company (U.S.A.), John Hancock Distributors LLC, nor any of their representatives provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal, state, or local tax penalties. Please consult your own independent advisor as to any tax, accounting, or legal statements made herein.
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