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Annuities are often referred to as "upside-down insurance policies." While life insurance policies require you to pay small, regular amounts over time to receive a large lump sum in the future, annuities do just the opposite. Generally annuities pay a larger amount in one lump sum in order to receive regular payments over an extended period of time. Payments to you can be arranged to start immediately or at some point in the future.
There are many different types of annuities. For example, with deferred annuities, purchase payments are made in one large sum, and installment payments are set to begin sometime in the future. This is different from an immediate annuity, which is similarly bought in one lump sum, but payments are set to begin immediately. Additionally, there are fixed annuities, in which buyers are guaranteed to receive payments throughout either their lifetime or some fixed period of time. The amount of these payments is based on many different factors and determined at the time of purchase. Whereas, a variable annuity is one in which the insurer invests premiums in a portfolio of securities. The value of the annuity, and likewise the payments, depends on the performance of the portfolio.
*Source: LIMRA’s Life Insurance Barometer Study 2013
Life insurance is important protection for those who have others depending on their paycheck. In the case of an unforeseen death, your life insurance policy should provide your dependents with ongoing income to replace yours, as well as to accommodate expenses such as funeral or other built up medical costs. Life insurance can also offer reduced income and transfer tax liability, and can be a ready source of cash at times when its likely needed most.
Additionally, many high-net worth individuals use life insurance policies to obtain coverage to pay estate taxes so their heirs are not burdened with these expenses. Often, families who haven't prepared for hefty estate taxes are forced to liquidate assets at unfavorable prices to pay for them.
Term life or cash value insurance?
Term life is often the favored type of life insurance because of its simplicity. With term life insurance, you pay the premiums and are then covered for the term you choose. Conversely, cash value plans are often favored for their tax-sheltered earnings, similar to employer-sponsored retirement plans or IRAs. Cash value plans allow you to invest your premium payments in various investment options
The types of insurance you may purchase will depend on the specific needs of you and your loved ones. In addition to the types of insurance discussed above, you may also consider other specific insurance plans that we can help you set up. For example, if you are a small business owner, you may want to consider small business insurance. Similarly, if you have goals such as saving for your children’s education or leaving them with inheritance money, setting up trusts for these specific purposes may be an appropriate vehicle for reaching these goals.
At Gundrum Insurance & Investments, LLC, we can help you to determine what types of insurance policy best suit your needs. We'll explain the many different types of insurance, the benefits and drawbacks of each, and then make specific recommendations
85 percent of consumers agree that most people need life insurance, yet just 62 percent say they have it.*
Planning a solid insurance strategy is a necessary and valuable service to protect you and your loved ones. At GII, the first step we'll take to put you on the right track is a careful assessment of your assets. We'll work with you to determine what types of insurance you may need, how much you'll need and finally how you may obtain the most appropriate plan(s) at the lowest cost. The strategy we build for you may include many different components such as variable or term life insurance, disability insurance, long-term care insurance, disaster insurance and/or business insurance. Because your needs are unique, we'll tailor the plan to protect what is most important to you.
Planning for unforeseen events is one of the most often overlooked aspects of financial planning. Just one unfortunate event can quickly erode the value of your financial plan if you do not have appropriate insurance
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