Insurance

Annuities act in opposition to life insurance. While life insurance protects you financially against an early or unexpected death, annuities protect you from the financial risk of living too long and outliving your money. There are different types of annuities including immediate, deferred, fixed, and variable. Annuities are a special form of investment that is a contract between, the investor, and the issuing insurance company, that states that the insurance company will pay you a series of payments for either a specific period of time or for the rest of your life.
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In the past, a life annuity contract consisted of a person paying an insurance company a specified amount of money in exchange for the guarantee that the insurance company would make periodic payments to this person for the rest of his or her life, thus ensuring that this person wouldn’t outlive his or her money.

However, individual annuity contracts these days allow the payout of accrued money in different ways. Generally, very few individual annuity contracts are actually taken as life income, or annuitized.

Annuitant—The individual who receives the payout of an annunity

Premium—The amount of money paid to the insurer for the annunity. This can be paid over time or in a single lump sum.

Owner—The individual who enters into an annunity contract with the insurer. This person may differ from the annuitant.

Beneficiary—The person named by the owner who would receive the death benefit from the annuity upon the owner’s death.

Annuities are very much like IRAs, in that the money grows taxdeferred, and the annuity owners cannot take any distributions from the contracts until they are at least 591/2 years old. All money invested in an annuity is done so after tax, and there is no tax deduction for investing in an annuity unless it is done inside an IRA annuity. Then, any tax deduction is subject to the same limits that other IRA contributions are subject to (i.e., $3000 per year). In most cases, those who take money out of their annuity contracts before they are 591/2 will face a 10-percent IRS penalty for early withdrawal, plus they will be responsible for taxes on the money that was withdrawn. Taxes are paid at ordinary income rates, regardless of how long the annuity has been held.

For nonqualified annuities (those not within an IRA plan), the annuity owner’s investment in the contract is the total premium amount paid, less any nontaxed distributions. Because the contract owner has paid in after-tax dollars, he or she (or the beneficiary, after the owner’s death) is entitled to have this amount back tax-free once distributions from the annuity begin. Therefore, hypothetically, if the owner puts in a total of $75,000, once he or she begins receiving payouts from the annuity, the owner will receive a total of $75,000 back tax-free. (Alternative minimum tax, state and local taxes may apply.) If the annuity is worth $87,000 at the time it is annuitized, the owner may only be taxed on the growth, $12,000.

Because the annuity grows tax-deferred, any movement of money within a variable annuity will not be considered for capital gains taxes. For example, you have $20,000 in the Growth subaccount, which is doing very well. You want to protect some of the money you have earned from this subaccount and wish to move $5000 to the Fixed subaccount. The transfer of the $5000 from the Growth subaccount to the Fixed subaccount is done completely taxfree. You won’t be taxed on the gain from the Growth subaccount.
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IMMEDIATE ANNUITIES

Immediate annuities require the annuitant to pay a lump sum of money, rather than paying a number of premiums over time. The payouts to the annuitant begin as soon as the lump-sum payment is received, or the annuity start date. This date is the first day of the first period (i.e., month) for which an amount is received as an annuity, under the current tax law. A likely use of an immediate annuity is by someone who is about to retire and would like to receive monthly income right away. An immediate annuity can be paid out in either fixed or variable amounts.

DEFERRED ANNUITIES

In contrast to immediate annuities, deferred annuities can have one lump-sum payment by the annuitant, or the annuitant can pay a set of premiums over time. The payouts for deferred annuities typically don’t start for at least one year after the purchase payments have ended. Usually, payouts don’t occur until many years later. However, just with immediate annuities, the payouts may be either fixed or variable. Deferred annuities make up the larger segment of annuity contracts that are purchased due to the IRS rules governing annuity payouts, as well as the desire by investors to take advantage of any potential tax-deferred growth.

SPLIT-FUNDED ANNUITIES

This is combination of an immediate and deferred annuity. This approach provides for a portion of the annuity to revert back to the owner as immediate income for a fixed period of time, or for life. The remaining money in the annuity grows tax-deferred, as a regular deferred annuity would. Split-funded annuities act as a good hedge against inflation since the deferred portion can be used in the future as additional income, if necessary.

FLEXIBLE-PREMIUM ANNUITIES

As the name implies, flexible-premium annuities are those in which the annuity owner has discretion over when the premium payments begin. The owner may also decide if, when, and how much the premium payments may change; they may also decide to stop paying the annuity’s premium. This type of annuity is only for deferred contracts.

SINGLE-PREMIUM ANNUITIES

These annuities are purchased with one lump-sum payment, rather than premiums over time. The premium may be paid just prior to the annuity’s payouts (for an immediate annuity), or it may be paid much earlier (for a deferred annuity). Both single-premium immediate and single-premium deferred annuities may be paid out in fixed or variable amounts.

As we mentioned in other articles the government only represents about 30% of our retirement income, the company retirement pension plan offers another 30% and many of us do not have one. It is up to individuals to invest wisely short and long term in order to make up for the short fall if he or she would like to live comfortably after retirement without giving up some retirement plans. Now you have reached your retirement age, there are some important investment options for your RRSP or 401k plan. In this article, we will discuss types of life annuity.

1. Guaranteed term annuity

a) An annuity that guarantees to make payments for a minimum period even if you die, any payment remaining in the contract is paid to your spouse or beneficiary.
b) Payment from the insurance company at the end of the guaranteed period, if you are still alive.
c) Normally, it is guaranteed up to age 90. The longer the guaranteed period the smaller amount of regular payment.

2. Joint and last survivor annuity

A joint life and last survivor annuity provides payments to you and for that of a second life. Payment continues with the same amount, after the first person dies. This type of annuity appeals to married couples. For registered funds, the joint life must be a spouse.

3. Single annuity

a) The annuity provides benefits for one person only.
b) Payment is based on life expectancy of annuitant.
c) Payment stops, if the annuitant dies.

4. Insured annuity

You liquidate your interest-bearing investments and use the resulting cash to purchase a life annuity contract.

a) The contract contains 2 parts insurance and life annuity with no guaranteed period.
b) Medical examination is required for you to qualify.
c) Capital preservation for the estate if you die.

The benefit of insured annuity includes increased cash flow to you while you’re alive, and insurance portion benefits to your estate at death.

I hope this information will help. If you need more information of insurance or series of articles of the above subject at my home page at:
http://medicaladvisorjournals.blogspot.com
http://lifeanddisabitityinsuranceunderwriter.blogspot.com/

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“Let Take Care Your Health, Your Health Will Take Care You” Kyle J. Norton

I have been studying natural remedies for disease prevention for over 20 years and working as a financial consultant since 1990. Master degree in Mathematics, teaching and tutoring math at colleges and universities before joining insurance industries.

In this day in age where the financial markets are in disarray and the future of so many people’s money is in doubt why would the government want to make it a rule (a punishable offense) to not allow the industry to inform potential customers of a safety net?

How can this make any sense? Our banking institutions have a safety net. It is called the FDIC and it is proudly displayed on fixtures, the front doors, desks, tables, stationary and websites. Anyone who does business with a bank knows what the FDIC stands for…it stands for security and guarantees and insurance protection. It creates piece of mind and allows for depositors in the banking industry to be free of fear. The underlying guarantee is backed by the full faith and credit of the United States Government. Your funds are guaranteed and will always be safe.

How about Credit Unions? The funds in your credit union are insured by the National Credit Union Share Insurance Fund. (NCUSIF). This protection was established by Congress in 1970 to insure member share accounts at federally insured credit unions. All federally insured credit unions proudly proclaim this insurance and make certain you know that your funds are safe. Guarantees, safety and security is their mantra and they want you to be aware of it.

How about stock brokerage accounts? What insurance is available to their investors? The protection in place is called Securities Investor Protection Corporation which was created by congress in 1971 to insure that any brokerage house that would become insolvent due to regulatory issues or bankruptcy would protect investors from missing assets such as securities. Without SIPC an investor could possibly lose their securities or money or be tied up in lengthy court actions. The letters SPIC are promptly displayed on all participating Securities Firms on their doors, furniture and on most correspondence. This insurance gives the investor peace of mind regarding access and availability to their funds and assets.

How about insurance companies? Life insurance and annuity products? It seems the government does not want you to know about their guarantees and the question is why? Why don’t they want the consuming public to know about this “secret security net?” Each state participates in these guarantees and it is known as “The State Guarantee”. This guarantee is in place to help and assist policy owners in the event of insolvency of an insurance company to provide funding and liquidity. Coverage and protection is generally for individual policies and the limits of protection will vary from state to state.

Here is the unbelievable part: most states will not allow an insurance agent to tell their prospects about this underlying guarantee until AFTER they have decided to purchase the insurance product. Insurance agents are not allowed to post the guarantee on their doors, furniture or correspondence. Advertising is strictly prohibited and yet the question still remains….Why?

Banks, Credit Unions, Stock Brokerage Firms can all advertise, discuss, display and market their guarantees and yet insurance agents and companies are prohibited. Insurance agents must never use this information to induce a sale and yet who would ever make a deposit in a bank without asking about FDIC?

The question remains still unanswered. Why is this guarantee not being made available to people who are considering an insurance product? How can banks and other institution advertise this guarantee and not insurance agents?

In this time of great financial stress would it not be comforting for a prospect to know about this safety net? The protection along with the great contractual guarantees would make them more likely to buy an insurance product and a bank product; it seems that way to me anyway.

Maybe I have answered the question myself……

With the ever increasing mergers, failures, competitions and consolidations, the insurance industry is facing tremendous pressure. If you want your insurance organization to gain a competitive edge, consider Outsourcing Insurance Services to India. Outsourcing insurance services to India can enable your organization to increase its efficiency and growth and also meet all the requirements of your valuable customers. India claim administration service providers can help your organization reach greater heights through increased proficiency.

India, a pioneer in providing outsourcing services across a wide range of industries has years of experience and expertise in providing quality insurance policy services, insurance services, annuity insurance services and claim administration services amongst others. Organizations in the U.S and U.K who have outsourced insurance services to India have been able to concentrate more on their core business functions while getting access to quality insurance services.

Outsource insurance services to India and benefit from expert services, organized process, quality control processes, customized services, experienced workforce and domain expertise. Outsourcing Annuity Insurance Services to India can also help your organization benefit from faster time-to-market and lower operating costs. If you are looking for professional claim administrative services, outsource to India and get access to reliable insurance services.

India Offers End-to-End Insurance Services

India offers varied insurance solutions dealing with health, property, life, annuities, reinsurance and property and casualty amongst others. In case you want a customized insurance service, you can approach your partner in India who will provide you with tailor-made solutions designed to suit your insurance service requirements. The following is a list of insurance services that can be outsourced to India:

1. Insurance Claims Services

You can outsource a wide range of insurance claims services such as loss runs, imaging, death claims, data analysis, recovery, subrogation, claims estimation, claims assignment, imaging and matured endowments amongst others. Outsource insurance services to India and benefit from accurate services.

2. Insurance Agency Management Services

India has expertise in offering agency management services such as, data exchange, representative finder, proposal generation, licensing, commission accounting, resource management, compensation and commissions amongst others.

3. Insurance Policy Administration Services

Outsource insurance policy administration services to India and get access to proficient services such as, billing, alpha inquiry, cash control, correspondence, policy changes, online enrollment, cancellations, new product introductions and case manager tools amongst others.

4. Insurance Compliance Services

India can offer insurance compliance services, such as, DMV reporting, checkfree IRS, checkfree 1099, STAT reporting to state agencies and GAAP reporting to state agencies.

5. Insurance Disbursement System Services

India has the expertise to offer disbursement systems services such as cash disbursement system, structured settlements and payments amongst others.

6. General Insurance Services

India offers a host of general insurance services such as policy conversion, imaging, workflow, document management, GL accounting, GL suspense, web channel integration, legacy system rationalization, componentization, straight through processing, architecture standardization and policy conversion amongst others.

7. Insurance Marketing/Sales Services

Outsource insurance marketing and sales services to India and get access to data warehousing, data marts, lead tracking systems, sales channel management and sales force automation amongst others.

8. Other Insurance Services That Can Be Outsourced to India

• Life insurance outsourcing solutions
• Offshore annuity insurance services
• Property and casualty insurance services

Outsource insurance services to India and give your organization a competitive advantage.

Every life insurance policy, although there is no nationwide uniformity in wording, will contain certain provisions which, in one form or another, are found in all life insurance policies. These may be called the “contents” of the policy. There are two important types of options available to purchasers of most insurance policies: dividend options and settlement options. These may be called “policy options.” Finally, there are certain clauses which may or may not be affixed to the life insurance contract.

The first page of the policy is usually a statement of the actual insuring agreement between the company and the insured. The name of the beneficiary frequently is stated on the first page and the policy declares that the provisions attached are all part of the contract. The amount of the premium to be paid each quarter or each year may be stated on the front page as well. The page concludes with the signatures of the officials of the company who are authorized to sign contracts and insurance papers. These officials usually are the president, the secretary, and the registrar. Following this summary of the contract come the general provisions of the policy. Some terms that follow include circumstances including suicide, incontestability, correction of age, delay clause, deduction of indebtedness, assignments, and so on. There is much to read and much to consider. While many of these conditions and terms seem similar, it is crucial to be completely informed of each policy. Ultimately, you want to choose the best life insurance policy for you.

When it comes to life insurance, the annuity is the true insurance. It is insurance against living too long, in another words, against outliving one’s ability to provide an income for him/herself. Basically, an annuity is a periodic payment made by the company in return for its having received a sum of money, the premium, from the annuitant or from another who paid the premium on behalf of the annuitant.

There are, in general, three methods of buying an annuity; by the single-premium method, by the annual-premium method, or by the use of the proceeds of a life insurance policy. Situations in which a person has accumulated significant funds to buy an annuity with a single lump sum occur less frequently than those in which a person early in life embarks upon a systematic method of buying an annuity through annual payments to a life insurance company. One of the very important settlement options offered by most life insurance contracts is the life income. This often provides the best solution to the problem of life-long support of the beneficiary. In regard to the start date of benefits beginning, annuities may be immediate or deferred.

All in all, in consideration of the amount of time you have to put into reading all of the fine print, and how many different policies you may have to go through to find the right one, it tends to get overwhelming. Sometimes it is better to go with an easier option, such as online life insurance quotes without medical exams. Some insurance companies nowadays are even letting you qualify and sign up within minutes, provided you have sufficient credit. Whatever your choice, make sure you are comfortable with it, as this is no joking matter; it’s about your life, and the protection of your loved ones.

By Sarah Martin

As we mentioned in other articles the government only represents about 30% of our retirement income, the company retirement pension plan offers another 30% and many of us do not have one. It is up to individuals to invest wisely short and long term in order to make up for the short fall if he or she would like to live comfortably after retirement without giving up some retirement plans. Now you have reached your retirement age, there are some important investment options for your RRSP or 401k plan. In this article, we will discuss types of certain term annuity.

I. Definition
Certain term annuity guarantees a periodic payment of a predetermined amount for a fixed term. Once the term has elapsed, payment stops, even if the annuitant is still alive. Because of the tax-deferred status of these products, many wealthy investors or above-average income earners choose to purchase term certain annuities for the tax advantages.

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II. Payment
Term certain annuities pay varying amounts depending on how much money was used to purchase the annuity. If the term certain annuity is short, then each payment back to the annuitant will be large. If the term is long, then each payment will be small.

III. Benefits of certain term annuity
a) Certain term insurance works best for wealthy people who want to defer taxes on income for a fixed period of time. A term certain annuity contract can sometimes be an option.
b) Individuals who will retire soon and need income coverage during that time.
c) As an alternative to other investments for a short period of time before retirement.
Since the main risk is that you may outlive your term annuity and be left with no money, it is wise to purchase this type of annuity under the guidance of a reputable financial adviser.

I hope this information will help. If you need more information or insurance advices, please follow my article series of the above subject at my home page at:

By: Kyle Norton