Annuities and the Annuity Contract Owner

An annuity is a contract between the buyer and an insurance company. In general, the insurance company promises to do something with the buyer’s money -- like grow it or pay it out over a number of years. This page should serve as a general overview of annuities. After you understand the concept you can look into the various annuity types.

Annuities can be helpful in some situations. In general, some benefits are:

• Tax-deferred growth and compounding within the annuity contract
• Guaranteed rates of return on your dollars
• Guaranteed lifetime payments if you annuitize (in some cases you don’t even have to annuitize in order to receive this benefit)
• Other features that may be important to you. These are various bells and whistles that do very specific things

Note that the guarantees are only as strong as the insurance company that issued the annuity. In other words, if the insurance company fails, the promise is no good. I recommend mitigating this risk by using only the strongest insurance companies out there.

The contract owner is the person that owns an annuity. Note that a “person” can be an entity in this case.

Contract Owner Activities

The contract owner goes through the process of purchasing an annuity. The contract owner is generally the person who signs all the paperwork and funds an annuity contract. The contract owner agrees to the terms of an annuity contract.

Contract Owner Rights

The contract owner chooses an annuity and makes decisions on all the details – when it starts, how much money goes in, when money comes out, and so on.
The contract owner also chooses the beneficiary and the annuitant in an annuity contract. In many cases, the contract owner may choose himself/herself as the annuitant.
If the annuity offers a variety of investment terms and choices, the contract owner also makes these choices.

Contract Owner Restrictions

Of course, the contract owner can only choose from what’s available in a given annuity. Each annuity out there has different options and restrictions. Even though the contract owner gets to make choices, the contract owner may have to pay a fee or penalty for certain actions.

Is An Annuity Right for You!

An annuity can be a great retirement vehicle. Annuities have asome of the same retirement benefits as other retirement plans like the employee sponsored 401K and an individual IRA, but an annuity typically doesn't have contribution limits, income limits, or mandatory withdrawals like the 401K and IRA. The retirement earnings grow tax-free even though after-tax dollars are used for contributions.

There are two categories for annuities: FIXED and VARIABLE.

• Fixed Annuity: offers a pre-determined interest rate on earnings which is guaranteed for a certain term
• Variable Annuity: premiums are invested among stocks, bonds, and money market accounts similar to a 401K and IRA

WOULD YOU BENEFIT FROM AN ANNUITY?

You might be one of the many individuals who are uncertain about annuities or have limited knowledge on these savings vehicles. The following is a summary on who might be able to benefit from this products, see if you fit into one of these descriptions.

If you:

• have maxed out your employee sponsored 401K retirement accounts or IRA and still have additional capital to invest
• have already RETIRED and fear you might outlive your money. An annuity would guarantee income for the rest of your life.
• are a LAWYER, DOCTOR, CPA, ARCHITECT, or FINANCIAL PLANNER. Since annuities are credit protected in many states, these products are SAFE from malpractice suits.
• have made an employment switch and still have your 401K invested with your previous employer. Annuities offer higher, guaranteed interest rates and are protected from the market fluctuations that your current IRA may not be. STOP LOSING YOUR MONEY!

In closing, some annuities not only offer higher, guaranteed interest rates, but some companies also offer a 10% BONUS for all deposits made into the account for as long as 10 years!

Which Life Insurance Policy Is Right For Me?

When buying life insurance, you want a policy which fits your needs without it costing too much. First, you should decide on how much you will really need, how much you can afford to pay, and the type of policy you want. Second, find out what various companies charge for that specific kind of policy. MCC Insurance Agency will be willing and able to help you with each of these shopping steps.



One way in deciding on how much life you will need is to figure out how much cash and income your dependents will need if you were to die in the near future. Think of life insurance as a source of cash needed for final exprenses, paying off taxes, mortgages and/or other debts. Life insurance can also provide income for your family's living expenses, educational costs, and other future expenses. Your insurance policy amount should come as close to making up the difference between 1) what your dependents would need if you were to die now, and 2) what they would actually need.

There are three basic and current life insurance policies: term insurance, whole insurance, and endowment insurance. The following is an outline in which the important features are noted.


TERM INSURANCE

• Coverage protection: for a "term" of one or more years, usually 30 years being the maximum
• Death benefits: paid only if the policy owner were to die within that term of years
• Renewable: some are renewable for more additional terms even if the olicy owners' health has changed
• Convertible: before the end of the conversion period, the policy owner may trade the term policy for a whole life or endowment policy even if he/she is not in good health

WHOLE LIFE INSURANCE

• Coverage protection: death protection for as long as the policy owner lives
• Cash values: a benefit the owner does not lose when he/she stops paying the premiums
• Loan: the cash value may also be used as collateral for a loan

ENDOWMENT INSURANCE

• Income benefit: pays a sum or income to the policyholder if he/she lives to a certain age
• Death benefit: if the policy holder were to die before that certain age, the death benefit would be paid to the designated beneficary or beneficiaries

In summary, do not buy life insurance unless you plan to remain faithful to it. A policy can be a smart buy when hels for 20 to 30 years, but it can be very expensive if you decide to quit during the early years of the policy.

At MCC Insurance Agency can aid you in choosing the right amount of life insurance and kind of policy you want and we will provide you with quotes from several companies for the comparison of similar policies.

When you finally receive your new policy, be sure to thoroughly read through it and inquire with the agent on anything that you do not understand. It is also important to review your life insurance policy every few years or so to keep up with income changes and life responsibilities.