Jan
28
Life Insurance Annuities
Filed Under Life Insurance
You have worked hard all of your life, you bought life insurance when you were young and the rates were not that bad. You have always taken very good care of yourself, physically and financially, and now here you are with a very bizarre sounding problem: you have outlived your assets. Once upon a time, the life expectancy was about twenty years less than what it is now. Living well into your eighties or even nineties is not as unusual nowadays.
Even with the most careful planning and the best insurance policies, there is a chance that your money will run out before your life does.
That is why the experts call the annuity the “reverse” life insurance policy. There are quite a few options and a financial review with a planner or an insurance agent is always the wisest course of action when selecting such an important item.
Generally, the two major differences in each of the annuity plans are the way money is put in and paid out in the end. If you know, for instance, that all of the money for this annuity will come from one source alone, then you can choose to have a single term annuity with deferred pay out.
If, on the other hand, your income sources vary, you can choose a more flexible plan. Always choose one that fits your current budget and your projected future needs, as well as one that has the best interest rate available to you.
If you have a large lump sum of money that you want to invest, you can buy into a guaranteed income life annuity which will protect you by taking that money and giving you a guaranteed pay out. Some annuities are also available as tax-deferred plans. Make sure that you understand everything about these investments before you lock your money into them; can you really afford this right now? Is there a set amount that you have to pay, or is it more flexible? What if you need that money before the annuity matures? Is there a penalty involved in an early withdrawal?
Remember all investments carry a risk with them, but they may still be worth it in the long run. Annuities are currently returning better for investors than a CD is because of low interest rates. No matter what you choose, seek the advice of a qualified professional and never invest beyond your current means. Saving for the future while you are starving in the present does not make any sense at all; nor does blowing money senselessly. If you do have the money to invest, do so, but be wise about it.
Do some research and know what it is that you want the money to do for you. Do you want to just get by in the future, or do you want a little cushion to pad any other retirement income that you might be looking forward to? All of these questions must be answered before you can move a single cent into the proper type of account.
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