Archive for January, 2009
Few Of The Reasons Why Immediate Annuity Should Be Bought By You
Daisy Wilson asked:
It is a fact that money is important to live your life. Surely, money is not the every thing but it is some thing. And, you just can not overlook its importance, especially in old age. When people grow old, they have to use their savings to make ends meet. But, it is extremely difficult to cope with the situation especially in current inflation.
However, one thing that can be always be considered by everyone is annuity. By choosing this particular option you can actually secure your future. But, before going for this particular option you have to educate yourself as there are different types of annuities, like deferred annuity and immediate annuity.
Although you can opt for any one of the options but it is better to go for immediate annuity. The reason is that immediate annuity allows you enjoy several great benefits. No doubt, deferred annuity is also a good option especially because you don’t have to pay income tax until you withdraw the money but immediate annuity has its own set of benefits. For instance,
• It is the best way supplement current income. If you are nearing your retirement, you can use the option of transferring another investment or savings account into an immediate annuity.
• In immediate annuity, you are also presented with the option of moving your proceeds into an immediate annuity from a deferred annuity.
• Taxes are levied only on the specific part of your annuity payments. In simple words, tax is on earnings not on principal amount.
• This type of annuity saves you from spending a lot of time in watching markets, dividends or report interest.
• There are several situations where immediate annuities, especially the Single Premium Immediate Annuities, can help in the best way. Retired life buyouts, pension termination, divorce cases and loan guarantee transactions are few of the situations where these types of annuities are extremely suitable.
• Although there are people for whom tax-free bonds are the best way to earn tax-free income but there is nothing like immediate annuity. Using an immediate fixed annuity is a better option because of the involvement of higher cash flow.
The fact of the matter is that if you are heading towards your retirement, you must consider the option of immediate annuity. But, do keep in mind that all of the aforementioned advantages are available only to those who spend some time in researching and opt for the best company. If you don’t work with the best company, you are likely to lose your money by getting entangled in a scammer’s trap. So, be vigilant as a simple decision can change your life for good.
PurchaseStructuredSettlements-1st.info
It is a fact that money is important to live your life. Surely, money is not the every thing but it is some thing. And, you just can not overlook its importance, especially in old age. When people grow old, they have to use their savings to make ends meet. But, it is extremely difficult to cope with the situation especially in current inflation.
However, one thing that can be always be considered by everyone is annuity. By choosing this particular option you can actually secure your future. But, before going for this particular option you have to educate yourself as there are different types of annuities, like deferred annuity and immediate annuity.
Although you can opt for any one of the options but it is better to go for immediate annuity. The reason is that immediate annuity allows you enjoy several great benefits. No doubt, deferred annuity is also a good option especially because you don’t have to pay income tax until you withdraw the money but immediate annuity has its own set of benefits. For instance,
• It is the best way supplement current income. If you are nearing your retirement, you can use the option of transferring another investment or savings account into an immediate annuity.
• In immediate annuity, you are also presented with the option of moving your proceeds into an immediate annuity from a deferred annuity.
• Taxes are levied only on the specific part of your annuity payments. In simple words, tax is on earnings not on principal amount.
• This type of annuity saves you from spending a lot of time in watching markets, dividends or report interest.
• There are several situations where immediate annuities, especially the Single Premium Immediate Annuities, can help in the best way. Retired life buyouts, pension termination, divorce cases and loan guarantee transactions are few of the situations where these types of annuities are extremely suitable.
• Although there are people for whom tax-free bonds are the best way to earn tax-free income but there is nothing like immediate annuity. Using an immediate fixed annuity is a better option because of the involvement of higher cash flow.
The fact of the matter is that if you are heading towards your retirement, you must consider the option of immediate annuity. But, do keep in mind that all of the aforementioned advantages are available only to those who spend some time in researching and opt for the best company. If you don’t work with the best company, you are likely to lose your money by getting entangled in a scammer’s trap. So, be vigilant as a simple decision can change your life for good.
PurchaseStructuredSettlements-1st.info
Personal Finance and Money Management 30-common Types of Annuity
Kyle J. Norton asked:
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 annuity.
1. Life annuity
Life annuity is a financial contract signed between you and insurance companies that guarantee to makes a series of payments in the future to you in exchange for the immediate payment of a lump sum or a series of payments prior to the return payments. Depending on the types of life annuity, payments may not stop if you die, any payment may be paid to your spouse or beneficiary such as guaranteed term annuity.
2. Term certain annuity
Term certain annuity provides you with a fixed monthly income until age 90, rather than for your full life. Should you die before age 90, your spouse receives the payments until her/his 90th year.The minimum term of term certain annuity is 3 years and the maximum term is 40 years.
3. Prescribed annuity
Prescribe annuity has a tax preferred status. There is no tax on the return of capital, however the interest that is included in the annuitant’s income is level throughout the term of the annuity. The taxable amount is lower in the early years and higher in later years, since it can only be purchased by non-registered money.
4. Deferred annuity
In deferred annuity, the proceeds from the plan must be used to purchase an annuity by a ’specific’ date in the future such as it may not begin later than the month of January of the year you turn age 70, although they can be put in place as early as age 60.
5. Immediate annuity
Immediate annuity means as soon as you pay a lump sum, you can receive annuity payments immediately.
6. Cashable annuity
If cashable annuity is a clause in the contract, the insurance company may allow you to cash in your annuity if you lose your health, or if interest rates are much higher than when you bought the annuity.
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:
http://medicaladvisorjournals.blogspot.com
http://lifeanddisabitityinsuranceunderwriter.blogspot.com/
cash for your annuity payment
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 annuity.
1. Life annuity
Life annuity is a financial contract signed between you and insurance companies that guarantee to makes a series of payments in the future to you in exchange for the immediate payment of a lump sum or a series of payments prior to the return payments. Depending on the types of life annuity, payments may not stop if you die, any payment may be paid to your spouse or beneficiary such as guaranteed term annuity.
2. Term certain annuity
Term certain annuity provides you with a fixed monthly income until age 90, rather than for your full life. Should you die before age 90, your spouse receives the payments until her/his 90th year.The minimum term of term certain annuity is 3 years and the maximum term is 40 years.
3. Prescribed annuity
Prescribe annuity has a tax preferred status. There is no tax on the return of capital, however the interest that is included in the annuitant’s income is level throughout the term of the annuity. The taxable amount is lower in the early years and higher in later years, since it can only be purchased by non-registered money.
4. Deferred annuity
In deferred annuity, the proceeds from the plan must be used to purchase an annuity by a ’specific’ date in the future such as it may not begin later than the month of January of the year you turn age 70, although they can be put in place as early as age 60.
5. Immediate annuity
Immediate annuity means as soon as you pay a lump sum, you can receive annuity payments immediately.
6. Cashable annuity
If cashable annuity is a clause in the contract, the insurance company may allow you to cash in your annuity if you lose your health, or if interest rates are much higher than when you bought the annuity.
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:
http://medicaladvisorjournals.blogspot.com
http://lifeanddisabitityinsuranceunderwriter.blogspot.com/
cash for your annuity payment
Selling Your Note For Lump Sum Cash
Phillip Hatley asked:
Many people have monthly payments coming in from a structured settlement, annuity, lottery winnings or from property in which they hold the mortgage. Often these people find that they are in need of the total amount rather than monthly payments over time. Usually these note holders are people that need the money for increased investing ventures or for reasons of financial stress. Whatever the reason may be, they need someone to purchase the note from them for a lump sum of cash in return.
A cash flow note is nothing more than selling a monthly note, such as a structured settlement or mortgage note, for a lump sum of cash in return. These transactions take place everyday in the United States and is booming business for people who actively pursue cash flow notes as a source of income.
Usually, the process of selling a cash flow note starts with the seller locating a note buyer. A note buyer is someone that buys notes for investment purposes and income streams. The note buyer has certain criteria and standards the note must meet before the note buyer will purchase the note. The note buyers evaluation process typically consist of different factors including the type of property, interest rate, the balance remaining on the note and the credit of the payor. The note buyer does these checks to estimate if the note is worth the risk he will assume if he purchases the note. The note buyer must consider many variables before agreeing to the purchase the note including bankruptcy by the payor, declining interest rates or the payor defaulting on the note.
In order to compensate and offset the risk, the note buyer will offer less than what the value of the remaining balance of the note is in order to make the risk within tolerable limits should any of the above factors occur. Although the note seller will not receive full value of the cash flow note, the seller will receive a lump sum of cash freeing up cash that would otherwise take years to receive in full. Some note holders need to liquidate to increase their portfolio and purchase other notes with a higher interest rate making more money than they would on the previously held note.
This is referred to as the time value of money and which means that the present value of your money is more than the future value of your money. Selling a low interest note and taking a lump sum payment and investing in a higher paying note earning the difference in your new investment. Selling a note to a note buyer can have a faster turn around time as well, rather than applying for a loan from a bank or lending institution. Cash flow note transactions can take up to two weeks, maybe less, whereas a loan could take a month or longer for approval.
Cash flow note sales are a viable way for a note holder to free up cash for liquidation purposes, taking the money and investing it elsewhere for a better return. Or in some cases, a note holder may need cash for emergency reasons or for health related reasons and selling a note is a quick way to acquire much needed cash. Although selling note is quick, a note seller should always do their due diligence on a potential note buyer before ever agreeing to sell the note.
PurchaseStructuredSettlements-1st.info
Many people have monthly payments coming in from a structured settlement, annuity, lottery winnings or from property in which they hold the mortgage. Often these people find that they are in need of the total amount rather than monthly payments over time. Usually these note holders are people that need the money for increased investing ventures or for reasons of financial stress. Whatever the reason may be, they need someone to purchase the note from them for a lump sum of cash in return.
A cash flow note is nothing more than selling a monthly note, such as a structured settlement or mortgage note, for a lump sum of cash in return. These transactions take place everyday in the United States and is booming business for people who actively pursue cash flow notes as a source of income.
Usually, the process of selling a cash flow note starts with the seller locating a note buyer. A note buyer is someone that buys notes for investment purposes and income streams. The note buyer has certain criteria and standards the note must meet before the note buyer will purchase the note. The note buyers evaluation process typically consist of different factors including the type of property, interest rate, the balance remaining on the note and the credit of the payor. The note buyer does these checks to estimate if the note is worth the risk he will assume if he purchases the note. The note buyer must consider many variables before agreeing to the purchase the note including bankruptcy by the payor, declining interest rates or the payor defaulting on the note.
In order to compensate and offset the risk, the note buyer will offer less than what the value of the remaining balance of the note is in order to make the risk within tolerable limits should any of the above factors occur. Although the note seller will not receive full value of the cash flow note, the seller will receive a lump sum of cash freeing up cash that would otherwise take years to receive in full. Some note holders need to liquidate to increase their portfolio and purchase other notes with a higher interest rate making more money than they would on the previously held note.
This is referred to as the time value of money and which means that the present value of your money is more than the future value of your money. Selling a low interest note and taking a lump sum payment and investing in a higher paying note earning the difference in your new investment. Selling a note to a note buyer can have a faster turn around time as well, rather than applying for a loan from a bank or lending institution. Cash flow note transactions can take up to two weeks, maybe less, whereas a loan could take a month or longer for approval.
Cash flow note sales are a viable way for a note holder to free up cash for liquidation purposes, taking the money and investing it elsewhere for a better return. Or in some cases, a note holder may need cash for emergency reasons or for health related reasons and selling a note is a quick way to acquire much needed cash. Although selling note is quick, a note seller should always do their due diligence on a potential note buyer before ever agreeing to sell the note.
PurchaseStructuredSettlements-1st.info
Annuities: Are Low-Cost Annuities A Good Choice?
Jeffrey Voudrie asked:
I’ve disliked variable annuities for many years because of their high fees and onerous surrender penalties. Now, low-cost variable annuities are available that slash fees and do away with the surrender penalties. Does this change my opinion on the use of variable annuities? Read on to find out.
There is $1.8 trillion dollars invested in annuities and a lot of that money is in variable annuities. To put this in perspective, there are $2.1 trillion in 401(k) assets. That’s right. There’s almost as much money in annuities as there is in 401(k) retirement programs!
As I’ve mentioned in previous articles on variable annuities, variable annuities are sold because of two main features–tax deferral and a death benefit guarantee.
Tax-deferral is emphasized if you are investing non-retirement money. Instead of having to pay taxes on dividends, interest and gains each year, those taxes are deferred until you withdraw the money from the annuity.
This used to be an attractive option, but not since capital gains and dividend tax rates have been lowered to a maximum of 15%. You see, earnings withdrawn from an annuity are taxed at higher ordinary income rates. These can be as high as 33%.
In years past there wasn’t much difference between ordinary income tax rates and those on dividends and capital gains. Now, there is a substantial penalty when earnings are taxed as ordinary income. As a result, it can take decades before you really see the benefit of tax-deferral.
The other main selling point of variable annuities is the death benefit guarantee. Investors like the peace of mind knowing that even if the market drops substantially, their heirs will get at least what they initially invested when they pass away. This is used to entice investors to choose an annuity for their IRA where the annuity’s tax-deferral feature is worthless.
Unfortunately, investors had to pay through the nose for those benefits–typically 1.4% of the value of your account each year. On a $200,000 account, you would be paying $2800 a year. Over ten years it is likely those benefits would cost over $30,000. That’s some of the most expensive insurance you will ever buy.
Now there are new, low-cost variable annuities available from companies like Fidelity and Vanguard that lower the costs of these benefits. For instance, Fidelity offers one that charges 1/4% in fees each year. That’s 1.15% less each year then the typical variable annuity. The Fidelity variable annuity still offers the much touted benefit of tax-deferral but it does not offer the death benefit guarantee.
If the death benefit is the main reason you want a variable annuity, you can achieve that goal with the Fidelity variable annuity by purchasing a separate term life insurance policy. Doing so would save a 60-year old non-smoking man almost $15,000 over ten years versus the typical variable annuity.
As investors age, these savings decrease. But even then, you have to realize that your ‘guarantee’ is actually much higher with a private life insurance policy than it is with the broker-sold variable annuity. In the broker-sold variable annuity, your either get the market value of the contract OR the death benefit, whichever is higher.
When you buy a low-cost variable annuity and a separate life insurance policy your heirs receive the market value of the annuity PLUS the death benefit of the life insurance policy. Even if the annuity loses half of its value, your heirs still end up with 50% more than the broker sold annuity. So even if it costs the same it is still more benefit. And you can keep the insurance policy even if you cash out your annuity.
The only situation I would recommend a low-cost, no surrender penalty variable annuity is if you currently have non-retirement money in a high-cost variable annuity and you have amassed a significant gain. Even if you have surrender charges, it may be worthwhile–see how many years it would take to make up the difference.
For everyone else, I still do not recommend it. If you have IRA money in an annuity, I suggest a non-annuity IRA when your surrender penalties end. You can achieve the same benefits for far less cost.
Sell Structured Settlement
I’ve disliked variable annuities for many years because of their high fees and onerous surrender penalties. Now, low-cost variable annuities are available that slash fees and do away with the surrender penalties. Does this change my opinion on the use of variable annuities? Read on to find out.
There is $1.8 trillion dollars invested in annuities and a lot of that money is in variable annuities. To put this in perspective, there are $2.1 trillion in 401(k) assets. That’s right. There’s almost as much money in annuities as there is in 401(k) retirement programs!
As I’ve mentioned in previous articles on variable annuities, variable annuities are sold because of two main features–tax deferral and a death benefit guarantee.
Tax-deferral is emphasized if you are investing non-retirement money. Instead of having to pay taxes on dividends, interest and gains each year, those taxes are deferred until you withdraw the money from the annuity.
This used to be an attractive option, but not since capital gains and dividend tax rates have been lowered to a maximum of 15%. You see, earnings withdrawn from an annuity are taxed at higher ordinary income rates. These can be as high as 33%.
In years past there wasn’t much difference between ordinary income tax rates and those on dividends and capital gains. Now, there is a substantial penalty when earnings are taxed as ordinary income. As a result, it can take decades before you really see the benefit of tax-deferral.
The other main selling point of variable annuities is the death benefit guarantee. Investors like the peace of mind knowing that even if the market drops substantially, their heirs will get at least what they initially invested when they pass away. This is used to entice investors to choose an annuity for their IRA where the annuity’s tax-deferral feature is worthless.
Unfortunately, investors had to pay through the nose for those benefits–typically 1.4% of the value of your account each year. On a $200,000 account, you would be paying $2800 a year. Over ten years it is likely those benefits would cost over $30,000. That’s some of the most expensive insurance you will ever buy.
Now there are new, low-cost variable annuities available from companies like Fidelity and Vanguard that lower the costs of these benefits. For instance, Fidelity offers one that charges 1/4% in fees each year. That’s 1.15% less each year then the typical variable annuity. The Fidelity variable annuity still offers the much touted benefit of tax-deferral but it does not offer the death benefit guarantee.
If the death benefit is the main reason you want a variable annuity, you can achieve that goal with the Fidelity variable annuity by purchasing a separate term life insurance policy. Doing so would save a 60-year old non-smoking man almost $15,000 over ten years versus the typical variable annuity.
As investors age, these savings decrease. But even then, you have to realize that your ‘guarantee’ is actually much higher with a private life insurance policy than it is with the broker-sold variable annuity. In the broker-sold variable annuity, your either get the market value of the contract OR the death benefit, whichever is higher.
When you buy a low-cost variable annuity and a separate life insurance policy your heirs receive the market value of the annuity PLUS the death benefit of the life insurance policy. Even if the annuity loses half of its value, your heirs still end up with 50% more than the broker sold annuity. So even if it costs the same it is still more benefit. And you can keep the insurance policy even if you cash out your annuity.
The only situation I would recommend a low-cost, no surrender penalty variable annuity is if you currently have non-retirement money in a high-cost variable annuity and you have amassed a significant gain. Even if you have surrender charges, it may be worthwhile–see how many years it would take to make up the difference.
For everyone else, I still do not recommend it. If you have IRA money in an annuity, I suggest a non-annuity IRA when your surrender penalties end. You can achieve the same benefits for far less cost.
Sell Structured Settlement