An annuity is an insurance contract. You pay a sum to a company, and the company agrees to pay money back over a set period or for life. Some are sold as income tools. Some are sold as a way to handle a parent's savings during a benefits claim. The sales conversation tends to focus on the monthly figure. The contract is where the real terms sit, and those terms decide what Dad gets, what his family can reach, and how a government benefit reviewer will read the money.

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Why VA's view matters before the pitch

Veterans pension and Aid and Attendance are income-based and net-worth-based. VA looks at the income Dad receives and the assets he holds, and it can look at money that was moved or spent in a way that does not match fair value. An annuity can touch each of those. Its payouts can count as income. Its purchase can raise questions about how the funds were held before they went in. Read VA's own pension pages on VA.gov, and get the answer about your father's case in writing from the VA office or an accredited representative before any purchase is signed.

Terms to find in the contract itself

Find the owner, the annuitant and the beneficiary on the first pages, and confirm they are the people you expect. Find the payout start date and the schedule, and whether payments are guaranteed for a fixed term, for life, or for life with a minimum number of years. Find the surrender schedule, which is the charge for taking money out early, and how long it runs. Find the free-look period, the window during which the contract can be cancelled for a refund, and get the exact length from the carrier in writing. Find what happens at death, including whether a successor owner is named and what the remaining payments do. Find every fee, including any rider, and ask which ones are charged each year.

Questions to put to the seller, in writing

  • How will VA treat the payments as income for Dad's pension, and where in VA's rules does that answer come from?
  • How will VA treat the purchase itself, and what records would you need to show where the money came from?
  • What is the total the contract pays over Dad's expected lifetime, and what is the total if he withdraws early?
  • Who is paid a commission, and how much, and is that paid on this contract or on any replacement?
  • What would Dad's options be if his care needs change, and what does it cost to exit?

A seller who answers these with a verbal assurance is giving you a sales pitch, not a contract term. Ask for the answers as documents.

What to do before anything is signed

Compare the annuity with the other ways the family could pay for care, using the same monthly figures and the same time frame. Ask an elder law attorney or an accredited veterans service officer to read the contract and tell you how it interacts with Dad's pension claim and any Medicaid question. The St. Louis offices listed on Local Help: St. Louis Offices include people who can point you to those reviews. This is a checklist of what to read and ask. It is not legal or financial advice, and nothing here recommends buying or avoiding any product.

Notes

Note 1: VA.gov, Veterans Pension Benefits, for income and net worth rules that apply to pension and Aid and Attendance. Note 2: VA.gov, pension pages on transfers and asset review, for how VA examines money moved before a claim. Check both pages for the version current when you read them, since rules and forms change over time.