LIFE INSURANCE VERSES ANNUITIES
SO MANY COMPANIES WITH SO MANY SUGGESTIONS. . . .BUT, WHO HAS MY INTEREST AT HEART AND CAN HELP THE MOST? WE CAN!
We are always concerned when competitive agents vie for the same available resources, but considering the resources are yours, you should want to make certain that your interest comes first and foremost.
LIFE INSURANCE _
The cornerstone of every financial plan is life insurance. It transfers the risk of your not completing your career, replaces income and provides the means to pay off debt before you have time to save. It can cover different needs such as survivor benefits post retirement or education for children. You may also accumulate substantial cash values, if, the product is configured correctly. Does this mean you don't need an annuity? Probably not, but beware of anyone that seeks to redistribute your deferrals into a policy of any type without strong supportive data. Giving up your life insurance may be giving up something that you cannot replace!
ANNUITIES -
Tax sheltered annuities are a valuable part of a sound retirement plan. Many companies offer these in school through 403(b) plans and a few through 457 plans. The advantage of a 457 plan is that if you want to take a distribution prior to age 59 1/2 that is not in a series of equal payments, then there is no pre-mature distribution penalty like in the 403(b) plans. Annuities are a great addition to your retirement package.
WHAT ABOUT TAXES? _
Until tax is paid on a life policy or an annuity at retirement or separation of service, income tax is due on the death benefit or the cash value depending on how benefits are structured. In the case of a life insurance policy, after tax is paid the death benefit moves into a tax free status for beneficiaries. When you think about it, you get the tax shelter during your building years and a tax free death benefit during your aging years when you are most likely to die. Not a bad deal. With annuities, all monies taken on death or in income are fully taxable and with the 403(b), all options under the age of 55 include a 10% additional penalty for pre-mature distribution but there are some opportunities to take money prior to age 59 1/2 without penalty.