Love them or hate them, let the benefits they provide speak for themselves.
There is a well-known financial planner, and you may have seen him appear on television and in print advertising, who has built his reputation by making this bold and controversial statement. “I hate annuities….”The intent of this paper is not to bring attention to or to discredit this professional pitchman.
He has already done that by making irresponsible statements, such as this, in public while privately buying stocks in companies that sell them. My purpose is to state, “I love annuities…but annuities may not be for everyone or used for all purposes…especially if the purpose of your money is to leave part or all of your estate to your beneficiaries.” In cases like this, I recommend life insurance.
Following is a brief listing of reasons why I love annuities if the purpose of your money is to spend it while you are alive:
• Your money is safe in an annuity because your principal is protected.
• Your money is secure in an annuity because it is protected by the strength of the insurance company that sells it.
• Because annuities are tax-deferred, interest earned on your account is not taxed until you withdraw funds from your annuity.
• The proceeds received from your annuity go directly to your beneficiary after your death and will avoid probate.
• An indexed annuity earns interest on the income growth of the index but is not subject to market losses.
• You may choose an income rider on your annuity that will guarantee lifetime income for you and spouse.
Following is a brief listing of reasons why I love life insurance if the purpose of your money is to provide for your beneficiaries after your death:
• Life insurance may be used to replace the policy owner’s lost wages after death.
• Life insurance proceeds may be used to help pay for your children or grandchildren’s education.
• Life insurance proceeds may be used to help pay off debts, and to protect your spouse’s financial independence.
• Life insurance may be used to pay off a home mortgage, allowing your spouse to live in the family home without debt.
• Life insurance may be used to support your favorite charities.
• Life insurance may be used to pay funeral expenses.
• Life insurance provides tax advantages to the owner and beneficiaries like no other product can.
• Some life insurance policies may provide benefits to pay for nursing and home health care expenses.
In conclusion, I love annuities and you should too if the purpose of your income is to provide for you while you are alive. I love life insurance and recommend it to my clients if the purpose of your money is to leave it to your beneficiaries after your death.
What is the purpose of your money? What do you want it to accomplish?
I recommend you consult your trusted advisor to help answer this critical question for you and your family.
Lawrence Castillo is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management.
Lawrence Castillo Host of Safe Money and Income Radio. L and C Retirement Income Planners, 4801 Lang St. NE Suite 100 Albuquerque NM 87109.
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By Lawrence Castillo
Guest Columnist
