When to Choose Life Insurance Annuity Coverage


A life insurance annuity contract requires you to pay an agreed sum of money to a company in exchange for the promise of regular income for the rest of the beneficiaries life after the investment matures. One catch that makes them different from other annuities, however, is that for payments to begin, the contract holder must be deceased. These financial products are extremely important for families with a single breadwinner, because if something were to happen to him, the rest of the family would have no source of income.

A family with one income, however, does not have to worry if that person takes out a life insurance annuity. A policy will need to be taken out in a value that is high enough to produce a payment that will be enough to support the family for the rest of their life if possible. This investment fund will earn a certain amount of interest, such as 6%, in order to provide a safe and conservative return. After all, it’s not the family’s goal to make a huge profit; they are only interested in protecting the premium against risk.

Investing in a life insurance annuity can be the ideal solution if you have health problems or other problems that may prevent you from being insured in the more traditional way. It is a relatively affordable solution for individuals to hedge against risk and promote the goals they have set for their investments. Another great thing about choosing this option is that your age does not play a role in your approval; other insurance options won’t approve you or charge you incredibly high premiums in this case.

Although many people assume that they no longer need life insurance once they retire, there are many reasons why a person would want to keep this investment until death. One of the most common reasons is for estate purposes. Gains accrued in these accounts are generally tax-deferred until distributed, not only to the original policyholder, but also to heirs. These investments can also be held to reimburse the final expenses of a whole life insurance policy. The cash value of these policies can also be cashed in before death if the policyholder wishes to borrow against its value to repay the loan.

When you’re looking for a life insurance annuity, you’ll find early on that there are many different options, choosing the one that best suits your investment goals will take some due diligence. That’s why it’s very important that you have a financial advisor you trust who can help you make these decisions.

Source by Lisa Cintron

Comments are closed.