Life

Life Insurance Plans for Any Budget

There are many kinds of life insurance, but they generally fall into two categories: term insurance and permanent insurance.

Term insurance is designed to meet temporary needs. It protects for a specific period of time (the "term") and generally pays a benefit only if you die during the term. This type of insurance often makes sense when you require coverage that will disappear at a specific point in time. For instance, you may decide that you only need coverage until your children graduate from college or a particular debt, such as your mortgage, is paid off.

In contrast, permanent insurance provides lifelong protection. The full face amount will be paid as long as you pay the premiums and no loans, withdrawals, or surrenders are taken. Because it is designed to last a lifetime, permanent life insurance accumulates cash value and is priced for you to keep over a long period of time.

It's impossible to say which type of life insurance is better because the kind of coverage that's right for you depends on your unique circumstances and financial goals.

But remember, the best way to figure out the amount and type of life insurance that makes sense for your particular situation is to meet with a qualified and licensed life insurance professional.

What is an annuity?

An annuity is a long-term investment between you, the annuitant, and an insurance company, the annuity issuer. Under this contract, you pay after-tax funds to the annuity issuer, who then invests your principal to meet your financial objectives and pays you or your beneficiary back with earnings (subject to the issuer's claims-paying ability).

If you have a fixed annuity, your interest rate is guaranteed. With a variable annuity, your earnings are linked with the fluctuating performance of your investments and may be worth more or less than your principal when redeemed. In addition, you have added control over how your money is invested, creating a higher potential for growth. However, this option comes with a higher risk in return.

Unlike other investment plans, there is no limit to how much you can invest in an annuity. Your funds will steadily grow with a tax-deferred status, and you will pay your regular tax income rate on only your earnings upon withdrawal.

What annuity options are available?

An immediate annuity can begin paying you right away. You can choose whether you want your income guaranteed for a specific period or lifelong payments. The amount of your payments is calculated based on your principal and your life expectancy.

A deferred annuity is broken up into two phases:

Accumulation: This is when you add money to your annuity, whether you pay in a lump sum or make a series of payments. You can continue to let your account grow tax-deferred for an indefinite time.
Distribution: This is when you begin withdrawing money from your annuity, whether you take out systematic withdrawals or annuitize to supplement your finances with a regular stream of income for life.

Why buy an annuity?

An annuity is a good investment option for individuals willing to take a bigger risk to earn a bigger payout. Your earnings can then be used for supplemental income during retirement, guaranteed financial independence as you age, or a monetary legacy to leave behind for your loved ones. An annuity can help you continue living comfortably well into old age.

Contact us to learn more about planning your future with an annuity. We will answer your questions and help you begin your investment process today.