A life insurance annuity contract requires you to pay an agreed amount of money to a company in exchange for being promised a regular income for the rest the beneficiaries’ life once the investment matures. One catch that makes them different from other annuities however is that in order for the payments to begin the holder of the contract must become deceased. These financial products are incredibly important for families with a single breadwinner because if something should happen to him or her, the rest of the family would have no source of income.
A family with a sole income earner does not have to worry however, if this person takes out a life insurance annuity. A policy will have to be taken out in a value that is high enough to produce a payment that will be sufficient enough to support the family for the rest of their lives if possible. This investment fund will gain a certain amount of interest, such as 6 percent, in order to offer a safe and conservative return. After all, it is not the objective of the family to make a huge profit; they are only interested in protecting the premium against risk.
Investing in a life insurance annuity may be the perfect route to take if you have health problems or other issues that may be preventing you from being insured in a more traditional way. It is a relatively affordable solution for individuals to hedge themselves 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 factor in your being approved; other insurance options will either not approve you or charge you incredibly high premiums in this case.
Although many people assume that they no longer need life insurance once they have reached retirement, there are many reasons why a person would want to hold on to this investment until death. One of the more common reasons is for estate purposes. The gains accumulated in these accounts are usually tax deferred until distribution not only for the original policy holder but for the heirs as well. These investments may also be held in order to pay off the final expenses of a whole life policy. The cash value of these polices may also be cashed in prior to death if the holder wishes to borrow against its value to repay the loan.
When you are in the market for a life insurance annuity, you will find very early on that there are many different options available, choosing the one that will best fulfill your goals for investment will require due diligence. This is why it is very important that you have a financial advisor whom you trust that can help you make these decisions.