Can I Buy a DIA Direct?

You aren't left hanging when you research annuities at
You aren't left hanging when you research annuities at Photo By: Alberto Guglielmi / Blend Images / Getty Images

COAUTHORED by Jim Farrish

You can investigate, and learn if a DIA suits your portfolio in the process.

The best way to evaluate a DIA (Deferred Income Annuity) relative to your specific scenario is to run a quote to determine if the benefit will meet your needs. Historically, the only way to do this was through an agent, or attempting to deal directly with the annuity company. The latter being almost impossible to accomplish.

Thanks to the folks at you now have an online source to run your own live quotes and play the “what if” game to determine if the benefits of a DIA work for you. Once you find the parameters that work for your situation you can run a final quote. You will be given the names of the annuity companies who can provide a DIA based on your specifications. Try if for yourself and see if a DIA works for you. It is surprisingly easy to do given the complex nature of income planning.

Can you keep it simple when dealing with statistical probability?

Income planning continues to be a cross between statistical probability and a simple mathematical formula. The statistical probability is the wildcard of the planning process. Unfortunately, it is applied to various stages of the income planning process. First, how long will you live? Actuaries have developed complex formulas and computations that give a percentage probability of how long each person will live based on all the variables.

Still, it is fair to conclude that no one knows the real answer until the day arrives. Similarly, probabilities based on historical data and factors are also assigned when investing in assets without guarantees. Similar challenges arise such as when you start taking income relative to how the assets move in the various market conditions.

It leads lead one to conclude that timing becomes as much a part of the equation as the science of the probability. These two points of statistical probability alone can cause most individuals to throw up their hands in defeat.

Guaranteed investments can provide relief from probability in their simplicity and stability.

One solution is to look at guaranteed investments like DIAs that can provide a guaranteed monthly income for the balance of your life. This takes all of the guesswork out of the equation, except for one, how long you will live. The positive is that if you beat the statistical odds, you still receive income. The negative is the possibility you might not beat the statistical odds and could die too soon. The latter is what people fear the most. From my view, income planning is about planning for the positive result of living longer than the stats say you will.

A Deferred Income Annuity delivers income for life which is always a positive.

A deferred income annuity (DIA) allows you to do such income planning now. It guarantees when you start the income, and it guarantees you will never outlive the income. This allows you to deal with the two statistical probability issues defined above.

Too good to be true? Not really. DIAs are simple products that solve for the income benefit by pooling the risk, much the same way as insurance companies pool the risk of homeowners, auto, and life insurance.

What are the drawbacks of these type of annuity contracts?

There is limited liquidity of the assets contributed to the annuity contract. When you are deferring to a specific point in time and putting the burden on the annuity company to guarantee you income for life, there is no liquidity to the contract. It is also possible you could die prior to the date the guaranteed income distribution begins. Then the trade off is lower income payment amounts if you hedged your bets and planned for that possibility. There are contracts that allow for the initial deposit to be returned to your heirs should you die prior to starting the income stream, and/or return the unused portion of your deposit if you die once the payments begin.

However, you decide to structure a DIA you are trying to provide future income payments at the highest contractually guaranteed amounts. You can easily go to to examine what options are available given the parameters you set forth. No need to make an appointment or wait for a phone call. Just plug in your pertinent information and look over the results. It really is that easy.