Funding Your Lifetime Annuity

Some seniors who have most of their equity in their home want the security of a fixed lifetime annuity, and don't care about not leaving any equity behind for their heirs. A Home Equity Conversion Mortgage, or HECM, which is insured by FHA, can fund the purchase of a lifetime annuity in two ways... One way is for the senior to exercise the "tenure" option under the HECM program and receive a fixed annuity payment for as long as he remains in the house. The second way is for him to exercise the credit line option under the HECM program -- drawing the maximum amount permitted -- and use it to purchase an immediate annuity from a life insurance company...

I shopped both options in early December 2009 for a male, age 86, with a house worth $400,000. This senior had a "Net Principal Limit" (NPL) under the HECM program of $288,000. That is the maximum amount of cash available for purchase of either annuity, after deducting HECM origination costs...

Yahoo Finance: Funding Your Lifetime Annuity