“LIFE insurance and annuities are supposed to accomplish straightforward goals: life insurance provides for your family if you die unexpectedly and annuities guarantee a steady stream of income in retirement. But right now, both are being promoted for their tax benefits.” ~ Newyork Times
Educate yourself on the key elements of the two by reading our list below.
Creates an immediate estate – no other legal method where an estate can be created at such a low cost. Especially important for young couples.
Cash Accumulation – Life insurance that you don’t have to die to use. The cash value is called Living Benefits. You can access the cash value through policy loans and withdrawals to supplement your retirement – helping you avoid outliving your savings.
Death benefit tax free to beneficiaries.
Accelerated Benefits – If the insured gets diagnosed with a terminal illness, the insurance company can accelerate the payout of the death benefit to them and it is usually tax free.
Annuities are for the liquidation of an estate – think of a 401k…something to be used in retirement
Annuities are called your “Safe Money” – They can never lose value. You participate in the gains of the market without the risk.
Annuities are designed to provide a life income once they are annuitized (or the payout period begins)
Insurance companies provide a guaranteed minimum interest rate that they will pay on annuities.
Annuities provide tax deferred growth – you aren’t taxed on the money until you take it out at a later date, when you are in your retirement years, and in a lower tax bracket.
Annuities are especially important for anyone that leaves an employer and has a retirement account. They can roll that money into an annuity to keep it safe for the long haul.