AAFMAA Settlement Options
AAFMAA offers four Settlement Options for beneficiaries. For all options (except Lump Sum) AAFMAA guarantees a 4% interest rate. If AAFMAA’s Net Yield on Assets (NYA) exceeds the guaranteed 4% (which has traditionally been the case), the beneficiary receives the difference between 4% and the actual return achieved in the “13th check.” For example, in 2009, AAFMAA achieved a 4.6% NYA, resulting in the 13th check (sent on May 1st each year) being 0.6% times balances.
At the time of death, AAFMAA sends out a Settlement Options Form to explain the options and ensure that all actions taken by AAFMAA are clearly disclosed and understood by the beneficiary.
| Life Annuity |
Fixed monthly payment for life
Amount is gender and age dependent – the younger the beneficiary, the smaller the monthly amount
Guaranteed minimum interest rate (currently 4%)
Payments stop upon the beneficiary’s death
Not available for a Trust
Once selected, this Settlement Option cannot be changed
Minimum net death benefit must be $10,000 for these options
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| Life Annuity 10 Years Certain |
Lifetime of monthly payments with a minimum of 120 payments (10 years)
Amount is gender and age dependent – the younger the beneficiary, the smaller the monthly amount
Guaranteed minimum interest rate (currently 4%)
If beneficiary dies before 120 payments are made, the remainder will be paid to the estate of the beneficiary, unless otherwise specified
Not available for a Trust
Once selected, this Settlement Option cannot be changed
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| Interest Only |
Entire proceeds are left with AAFMAA
Monthly payment based upon a guaranteed annual interest yield of 4%
Can withdraw funds up to twice per year, $5,000 minimum withdrawal
Upon beneficiary’s death, remaining death claim is paid to the estate of the beneficiary, unless otherwise specified
Beneficiary may select another Settlement Option at any time
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| Lump Sum |
Entire proceeds are paid in one lump sum
Beneficiary is then responsible for investing the assets
Alternatively, the beneficiary may elect to take a partial lump sum payment and choose one of the above options on the remainder, provided remainder is $10,000 or more
Full amount of the death benefit can be returned for any option provided that:
- The check(s) are returned to AAFMAA within six (6) months of issue date, AND
- Check(s) have not been cashed
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If you need more information about AAFMAA’s Settlement Options, give our Beneficiary Assistance Team a call toll-free at 1-800-522-5221
NYA
NYA refers to the rate of return on an investment after subtracting all expenses including commissions, costs of purchase, and taxes. A premium that covers the present value of future claims.