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  • Writer's pictureAmber Hinds

Options Available to MCA Beneficiaries when The Annuitant Passes

When people hear the word “annuity”, many thoughts may come to mind. Many people think that a Medicaid Compliant Annuity (MCA) doesn’t have any residual death benefit when the annuity owner/annuitant passes away because they are thinking of “life only” or life contingency annuity. However, a MCA is typically structured with a period certain/guaranteed payout period. A MCA is typically not a life only annuity that doesn’t have any residual death benefits when the owner/annuitant passes.

With a MCA, when the annuitant passes, there are a couple of options for beneficiaries, so you must find out all of the information so that you know what is right for you.

After the annuitant passes away, insurance companies will distribute any remaining payments to beneficiaries in (1) a lump sum or (2) stream of payments.  For example, if someone buys an MCA with a single premium of $100,000 and they choose to structure the annuity over 60 months, the monthly payments will be approximately $1,700. If, though, the annuitant passes away before the 60-month timeframe, then the beneficiary can either continue the monthly annuity payments as scheduled, or they can choose to have a lump-sum of cash at a discounted rate.

However, not all insurance companies offer the second option, but most do. It’s essential to talk to AshBer about your specific needs and any questions you have regarding particular insurance company’s policies and also very important to include a beneficiary in the annuity contract terms to make sure that your money goes to the right person.

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