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Periodic distribution means you just request that they send you some of the money that’s in your account. You tell them the amount and how often you want to withdraw from your accounts.

Annuitization, however, is much different. Through this method, you receive a monthly check from your annuity. The amount of the check and how long they continue to send it is based on four factors:

1. The balance in your annuity as of the date you establish annuitization. The more money in your account, the more you can receive each month.

2. How many years you want to receive payments (most people choose "lifetime" — meaning the insurance company must estimate your life expectancy using actuarial tables). Obviously, the longer the payment schedule, the less you get with each payment.

3. The rate of return the insurance company assumes it will earn during your payout period. The higher return it expects to earn, the more money you get every payment.

4. Your choice of payment method (outlined below).

Most annuities offer seven or more annuitization choices. Some include:

• Life Certain. You get a monthly check for life. Only when you die does the money stop. Your spouse and children get nothing, even if you lived long enough to receive only one payment from your annuity. But you might win, too: If the insurance company estimates that you’ll live 20 years and you live 30, the company will send you more than your account balance justifies.

• Term Certain. This option gives you a monthly check for a guaranteed minimum number of years. If you die in the interim, the payments will continue to your heirs until the term is up.

• Joint Life. This assures that payments will continue as long as you or another person is alive. This protects your spouse in case you die first, and is commonly selected for obvious reasons.

But there is one BIG downside to annuitization that doesn’t get much attention: Your decision to annuitize is irreversible. Once you choose to annuitize, you’re guaranteed to receive a monthly check from the insurance company (provided it’s still in business, of course), but you’ll never have access to your account balance, ever. You will receive a monthly income and that’s it.

Some people like the idea of getting a monthly check that they can’t outlive. After all, this is how pensions and Social Security work. But it does not make sense for everyone. What if you need the principal in the future for some unknown expense, such as a medical crisis? What if your kids or grandkids need some money?

Therefore, you may want to receive money from your annuity in the form of a periodic distribution. You can receive money monthly if you want it, and you can receive as much as you would have received from annuitizing, anyway. But you won’t be giving away your rights to receive all your money anytime you want it.

If periodic distributions are so much better than annuitizing, why do annuities even offer annuitization? First of all, for an annuity to be tax-deferred, it must allow the owner the option to annuitize the contract. But it’s also in your insurance company’s best interest to have you annuitize. They stack the odds in their favor: Even though you might live longer than they expect, it’s highly unlikely that you’re going to beat them at their own game.

But insurance companies are now paying insurance agents and financial advisors a commission to convince their clients to annuitize their annuities. In other words, two facts have become clear:

1. Annuitization must be a great deal for insurance companies, or they wouldn’t be paying advisors to recommend it, and

2. Advisors must not be recommending it enough, because these insurance companies feel compelled to pay the advisors to give clients this recommendation.

Will we start to see more and more advisors pitching annuitization to their clients? If we do, you should be aware of a possible conflict of interest. This new commission program helps the insurance company and the advisor, but it likely won’t be of any value to you.

When you’re ready to receive the money, just take it periodically, like you would from any mutual fund. And if an advisor recommends that you annuitize, ask if he’s getting paid to tell you to do that.

About My Services

I believe in providing service to all my clients even after the mortgage closes. If you ever need assistance in dealing with any issues that you may run into, please let me know. Here are some of the ongoing services I can provide you:

• Evaluate any "low mortgage rate" offers you get in the mail or via email
• Assist you in obtaining a home equity loan or home equity line of credit should the need arise
• Help you properly manage the equity in your home to achieve the highest return
• Assist any friends, family or co-workers who may be in the market to buy a home or refinance their mortgage
• Review your credit report with you if you feel you may be a victim to identity theft
• Provide you with names of trusted financial planners or tax planners if you need this type of assistance
• Review your auto and homeowner's insurance to make sure you have the coverage you need and to make sure you are not paying more than you should
• Advise you when you may want to consider refinancing your mortgage based on prevailing interest rates, and your level of debt.

At Your Company Name, we offer mortgages for most buyers, including ones who are self-employed or who have damaged credit. We have lenders who offer 100% financing meaning no down payment for qualified buyers.

We also offer mortgages with start rates as low as 1%, making it easier to get a buyer into a home or use their equity to create an investment portfolio while having a minimal impact on cash flow.

If you know anyone who can benefit from my services, please call my office. Referrals are very important to me and my company.