The future is uncertain. It always has been, and it will most likely remain that way. There are certain steps you can take to plan for the future, steps that protect you and your loved ones from unforeseen circumstances. One of the best ways to do this is by purchasing a life insurance policy. If you have any questions about which life insurance policy is best for you, the experts at Mountain Plains Agency are happy to help you. We have licensed insurance agents that serve Fort Collins and the Front Range. We are happy to help you with any of your insurance-related problems. Give us a call today at 970-672-4144 to learn more about how we can help you.
What is an Annuity?There are different ways that a life insurance policy can protect your family. One way is by paying out an annuity. As an investment tool, an annuity is simply a sum of money that is paid out to the owner of the annuity over a certain amount of time. This basic definition will give you an idea of how a life insurance policy can help your loved ones. The alternative to an annuity would be to receive the lump sum death benefit. Some people plan for receiving the lump sum due to the high cost of funeral expenses as well as requiring funds to shift their lifestyle — moving, medical expenses, education payments etc. The downside to the lump sum payment is that it can be easily mismanaged. This is especially important if the benefactor(s) of your insurance policy is not adequate with personal finances. The annuity is a way to simultaneously invest and control the pay-out of a life insurance policy. Whether the annuity is set up over a 10, 15, or 20 year period, you can ensure that there is a steady flow of money going to your beneficiaries.
Types of AnnuitiesWe mentioned earlier that annuities are investments. Annuities come in the following varieties: fixed and variable.
- Fixed annuities earn interest at a fixed rate that is determined at the time you purchase the annuity.
- Variable annuities have an interest rate tied to the market fluctuations that may increase or decrease over the span of the annuity.
- Fixed-period annuities pay out for a certain amount of years such as 10, 15, or 20. If you pass away before the annuity is finished paying, the remaining payments go to your benefactors.
- Lifetime annuities pay you for the rest of your life, but they may be at a lower rate than the fixed period annuities. If you are young, consider purchasing a lifetime annuity. Statistically, you will live long enough for this annuity to benefit you.