Annuities and Insurance
Annuities and other insurance products can provide peace of mind, but these products can be complicated. Know what you are getting into before you invest.
SGLI is a program of low cost group life insurance for servicemembers on active duty, ready reservists, members of the Commissioned Corps of the National Oceanic and Atmospheric Administration and the Public Health Service, cadets and midshipmen of the four service academies, and members of the Reserve Officer Training Corps. Get more information online or call toll free (800) 419-1473.
Remember one thing when you're buying life insurance. Unlike health and other types of insurance, you will never receive any benefits from it. Instead, someone else, the beneficiary you designate, will receive the benefits. When you think of buying life insurance in this way, it puts a whole new spin on things.
Sales of equity-indexed annuities (EIAs) have grown considerably in recent years. Although one insurance company includes the word "simple" in the name of their product, EIAs are anything but easy to understand. One of the most confusing features of an EIA is the method used to calculate the gain in the index to which the annuity is linked. Before you buy an EIA, you should understand the various features of this investment and be prepared to ask your insurance agent, broker, financial planner or other financial professional lots of questions about whether an EIA is right for you.
A variable annuity is a contract between you and an insurance company, under which the insurer agrees to make periodic payments to you, beginning either immediately or at some future date. You purchase a variable annuity contract by making either a single purchase payment or a series of purchase payments. A variable annuity offers a range of investment options. The value of your investment as a variable annuity owner will vary depending on the performance of the investment options you choose. The investment options for a variable annuity are typically mutual funds that invest in stocks, bonds, money market instruments or some combination of the three.
A life settlement, or senior settlement, as they are sometimes called, involves selling an existing life insurance policy to a third party—a person or an entity other than the company that issued the policy—for more than the policy's cash surrender value, but less than the net death benefit. Life settlements can involve almost any kind of insurance policy, including variable policies.