Life and Annuity

ANNUITIES		LIFE INSURANCE DEFINING YOUR NEEDS
An annuity is a product which can provide you with an income for as long as you live. When it comes to annuities there are two types: - The 1st is when you pay a lump sum to a life insurance company, and they pay it out to you right away in periodic installments. This type is known as an immediate annuity - these payments start to you immediately. - The 2nd, and more common, is where money paid by you is accumulated at interest over a period of time. The accumulated amounts, if you choose, will then be paid out to you in periodic installments, usually when you retire, in order to supplement your retirement income. This type is known as a deferred annuity - the payments to you are deferred for a number of years. Currently, a deferred annuity may have tax advantages, in that the interest credited to your funds is deferred from current taxation. That is to say, income tax is not owed until you start receiving distributions from the annuity. Both types of annuities offer you certain options for receiving your income. It is usually paid to you monthly. The most common options are: Life Annuity - The company will pay you an income for as long as you live. Period Certain Annuity - The company will pay you an income for a specified amount of time (5 years, 10 years, 20 years, etc.). Life Annuity with Period Certain - The company will pay you an income for as long as you live, but if you die before the period certain that you choose, the income will be paid to a survivor you designate until the end of that period. Joint and Survivor Annuity - The company will pay an income to you during your life, and after your death will pay a percentage of that income (50% or 75%, for example) to a survivor you designate during, his or her life.		When you buy life insurance, you want a policy which fits your needs without costing too much. Your first step is to decide how much life insurance you need, how much you can afford to pay, and the kind of policy you can get that meets your cost and coverage goals. Then, find out what various companies charge for that kind of policy. There are many reasons for purchasing life insurance among which are the following: Family protection to provide financial security to surviving family members upon the death of the insured person. Insurance to cover a particular need such as paying off a mortgage or consumer debt upon the insured’s death. Business insurance to compensate a company on the death of a key employee or to provide a surviving partner the resources to buy out the deceased partner’s share of the business. To provide funds to pay estate taxes or other final obligations necessary to settle a deceased person’s estate. To provide the funds necessary for the deceased person’s burial expenses. Accumulation of funds to supplement retirement income if you are going to make a good choice when you buy life insurance, you need to understand which kinds are available. If one kind does not seem to fit your needs, ask about the other policies which are described on this site. If you need more information than is given here, you should check with a life insurance agent or company or consult books on life insurance which are available at your public library.