An annuity is an insurance instrument that insures retirement. Learn about annuities with information from a registered financial consultant in this free financial planning video

Here is the video on Youtube:

Advice on Personal Insurance & Commercial Insurance. Copyright ©. All Rights Reserved.

An annuity is an insurance instrument that insures retirement. Learn about annuities with information from a registered financial consultant in this free financial planning video.

Here is the video on Youtube:

Advice on Personal Insurance & Commercial Insurance. Copyright ©. All Rights Reserved.

The term annuity is used in finance theory to refer to any terminating stream of fixed payments over a specified period of time. This usage is most commonly seen in discussions of finance, usually in connection with the valuation of the stream of payments, taking into account time value of money concepts such as interest rate and future value.Examples of annuities are regular deposits to a savings account, monthly home mortgage payments and monthly insurance payments. Annuities are classified by payment dates. The payments (deposits) may be made weekly, monthly, quarterly, yearly, or at any other interval of time.Finding the present value of an annuity using a financial calculator or an annuity table.

Here is the video on Youtube:

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When changing a job, you have a few choices with regard to your 401k account. You can either keep the 401k with your old employer, if they allow it, you can rollover your 401k account to your new employer, or you can rollover your 401k benefits to a self-directed IRA.

Keeping your 401k with your old employer will have no benefit for you or your employer, and most employers prefer that they ex-employees transfer the money. So, the next best option for you is to rollover the 401k benefits to your new employer.

Most 401k plans have just 15 mutual fund choices and you will benefit from rolling over your 401k to your new employer if your plan has a loan provision where it will be easy for you to borrow money.

You can also rollover over your 401k to a self-directed IRA and this is of two types — contributory and rollover IRA. In a contributory self-directed IRA, you can contribute annually but you can no longer roll back the 401k part to another new employer’s 401k. However, a rollover IRA is more flexible. A rollover IRA allows you roll back the proceeds to a 401k plan so that you can take advantage of the loan provision in the 401k plan. However, you should not make annual contributions to this IRA because of tax reasons. A rollover IRA is set up through a brokerage firm which means you will have access to the entire gamut of mutual funds that the firm has to offer.

By Kum Martin

about the author

How To Make Money In Annuities,
401K Tax Penalty,
Guaranteed Minimum Pension For Widows

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You can opt for a deferred or immediate annuity.
In either case, how much to invest in annuities depends on 3 factors:

1. Your immediate actual and potential financial needs
2. Your long-term financial goals
3. Your current savings/investment portfolio

The most important factor is your immediate actual and potential financial needs. If you have a sudden need for cash while you have a deferred annuity, usually, you can take out a limited amount of money without having to pay a penalty. In contrast, if you make a large withdrawal within a few years after you’ve taken out the annuity, it is likely that you will have to pay a penalty.

When you’re buying an immediate annuity, you usually can’t get any more than the regular payments, no matter how badly you need cash.

If, however, you are lucky enough to have other sources of cash for emergencies, you can use the criteria of your long term financial goals, current savings & investment portfolio to determine how much to invest in annuities.

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Choosing a beneficiary for your retirement account is an extremely important decision. Often the decision is pre-empted if a you are married because specific rules are in place. Under normal situations, most married people will name their spouse as the beneficiary of their retirement accounts. If a situation were to exist where someone other than a spouse was the intended beneficiary, the written permission of the spouse would be required. Some state laws will not allow this arrangement without permission of the courts. Other factors in determining this arrangement can be the type of retirement account.

If your state of residency is not a community property state, you will be allowed to name any beneficiary you wish on your IRA account even if you are married. In community property states your spouse generally already owns ½ of your IRA account. Some community property states have a special form that needs to be signed and will be provided for you by your custodial (Alaska). Other factors that could be part of this decision are IRA accounts in place prior to marriage.

If a spouse inherits a retirement account, it can be rolled over into their own name simply by filing a beneficiary claim form, providing proof of death and proof of identity. The decedents IRA will now become the beneficiaries IRA. Once this process is completed, the IRA will be considered the original owner. The new owner will then name a beneficiary for the IRA and the surviving spouse does not have to pay income taxes until the funds are used.

Estate: You can also name your estate as your beneficiary but this will mean these funds will be subject to probate exposure and legal expenses. It generally is not a good decision to name your estate as beneficiary.

Minors: Minor children (under 18) can be named as a beneficiary but caution should be used. A minor cannot legally manage their own IRA and a guardian will need to be appointed for that purpose until the child become of age. Often times a parent can be appointed to provide this service for their child.

Multiple: More than one beneficiary can be named for an IRA. In the event of the death of the original owner, the IRA is split among the beneficiaries and teach portion becomes an individual IRA. Different rules apply for required minimum distribution if the decedent is over or under age 70 1/2 at the time of death. If under 70 1/2 then the IRA

Trust: Many people will name a trust as the beneficiary and use the trust as the distribution vehicle. There is almost no reason to use a trust (revocable living trust) because a named beneficiary on a qualified plan already avoids probate cost and expense. If a trust is named as the beneficiary, the RMD of the IRA will be based on the age of the beneficiary of the trust.

Charity: Charities can also be named as a beneficiary in an IRA. If this happens, the charity has up to five years to withdraw the funds. Since a charity is generally tax exempt, the funds will not be taxed if received as a beneficiary.

Naming a beneficiary of a qualified retirement plan can be a very important decision. It is always advised to seek legal and tax advice prior to making a final decision. Be careful and understand that over time the rules affecting these accounts can be changed or modified.

Obtain a free guide about investing in annuities: Annuity Guide

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A life insurance contract is relatively straightforward; you agree to pay a premium at regular intervals, and the insurance company agrees to pay a certain sum of money to your beneficiary upon your death.

The Definitions of the Parties Involved

There are three parties to a life insurance contract. First, there is the insured. This is the person whose life is being insured under the policy. Next, there is the insurer. The insurer is the insurance company who underwrites the risk.

And third, there is the owner. The owner and insured are not necessarily one and the same. Someone can buy a life insurance policy to insure the life of someone else, such as their spouse.

The person who buys the policy is the owner, and the person whose life the policy is based on is the insured. When the owner and the insured are different people, premium payments are the responsibility of the owner.

Every life insurance contract also has a beneficiary. This is the person who receives the proceeds from the policy in the event of the death of the insured, and is assigned by the owner. There are two types. An irrevocable beneficiary can not be changed unless the beneficiary gives his or her permission; if it is revocable, the owner can change it at any time.

Terms & Conditions of a Life Insurance Policy Defined

The policy is subject to certain terms and conditions. There are usually certain exclusions that apply, depending on the person being insured. But with almost every policy, death as the result of suicide during the first two years of the policy term is excluded from coverage. Also, during the first two years of the policy, often referred to as the contestable period, the insurance company retains the right to not immediately pay out, even if the death is caused by a condition that is covered in the policy. The company can order an investigation into the death of the insured, to make sure that the death was not deliberate or the result of homicide.

Definitions of the Elements of a Life Insurance Policy

The amount paid to the beneficiary is called the face amount. The maturity date is reached upon either the date when the insured deceases or reaches a certain age. Life insurance is most often used to provide income protection to the spouse of the deceased. Regardless of the reason for buying the insurance, the owner (if not the same person as the insured), must have an insurable interest. In other words, the owner of the contract must have a reason for wanting to insure the life of that person, otherwise the contract is void.

When the person covered by the policy dies, the insurance company requires proof of death before paying the claim. A notarized death certificate is the most commonly accepted form of proof. The benefit is paid out either as a lump sum or as an annuity that is paid out over time. Any annuity can be a good way to receive the benefits. It is possible for the beneficiary to set up a lifetime annuity, which would guarantee that person a certain amount of monthly income for the rest of his or her life.

Basic Types of Life Insurance

There are two basic types of life insurance, temporary and permanent. Temporary insurance is known as term life. An example of a term policy would be a 20-year term life, which means that the policy will pay a death benefit if the person dies within the next twenty years.

Permanent insurance includes whole life and universal life. Whole life provides for a payout no matter when the person dies, but premiums have to continue to be paid, usually right up until the insured reaches the age of 100. Universal policies are somewhat similar, but they allow for greater premium flexibility. Universal insurance is somewhat complicated; you should talk to an agent before buying it.

I hope this information has helped you become acquainted with life insurance. You should sit down with your spouse and talk about buying a policy. Then, call an agent who works for an insurance company with a strong financial rating and make an appointment to discuss your objectives. Use the information that was presented here to help you make intelligent choices so your family will be protected in the event that something happens to you.

Author Description
Jim Pretin is the proprietor of http://www.forms4free.com, a service that helps programmers make simple email forms for websites.

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