Annuities, a Great Idea, but.....
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Life Insurance

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Annuities

Annuity Owner Mistakes


Is Your Annuity Company Giving You the Best Deal?

 

Many annuities offer a great rate to start, but then you see the interest rate drift down after the first year.  There is a solution. 

Simply roll over or exchange your annuity for a new annuity at a potentially higher rate. (Surrender charges could apply

--we can check that for you.)  Please take a look at your annuity and find out the current rate.  Then give me a call and I'll

tell you the highest rates that are available.  Exchanging your annuity may or may not be beneficial. 

We can help you weigh the pros and cons.


Are You Making This Annuity Mistake?

The IRS Could Take 50% of Your Annuity Value!

 

Many annuity owners lose half of their annuity value and most are

not aware of it!

Take a look at the followitng example:

Mary, age 55, purchased a fixed annuity for $50,000. She

held it for 10 years and theinterest accumulated nicely.

The account doubled to $100,000 (a compounded rate of 7.17%).

So far Mary was very happy with this alternative. She never

gave much thought about what happens to the annuity at

her death. She figured she would eventually withdraw

the money and use it. The truth is that less than 10%

of annuity owners make any withdrawals from their annuity.

If the owner passes away, the policies can get hit with some

very large taxes.In Mary's case, here's the picture at death

when the taxes are due:

Annuity Value: $100,000

Income Tax -20,000

Estate Tax -32,000

Beneficiaries get $48,000

Is there a remedy? Yes! Mary could annuitize the annuity

(deferred taxes or sales charges couldapply or a 10% tax

penalty if under age 59 1/2). When you annuitize the annuity,

you select apayout option that may include a lifetime income

from the annuity company. You trade the $100,000 balance for

a guaranteed income for life. Mary had her insurance company

make monthly payments to her of $700. She used the after tax

dollars to purchase a life insurance policy on her life, payable

to her beneficiaries. She purchased a $275,000 universal life

policy with a death benefit guaranteedto age 115. Now, instead

of Mary's heirs getting only $48,000

at her death, the heirs receive $275,000 of life insurance death

benefit, free of income taxes. (The proceeds of the life insurance

policy can be kept out of the estate through proper estate planning).

That is almost 6 times as much money for the

beneficiaries.

 


Annuities Help Reduce or Eliminate the Tax on Your

Social Security Income

 

Before 1984, Social Security income was tax free.  Today, however, taxpayers are

paying tax on up to 85%of their Social Security income.  The good news is that

annuities canreduce or eliminate the income tax onyour Social Security income. 

The IRS calculatesthe tax on your Social Security income based on your total

income from all sources. However, income you earn on an annuity that is

reinvested does not appear on yourtax return.Therefore, annuities may

reduce your total income for Social Securitytaxation purposes.  Tax free

bonds will notreduce the tax on your Social Securityincome as tax free bond

interest is included for Social Security taxation purposes.

In fact, if you shelter enough income in annuities and bring your

income below the

thresholds (adjusted gross income of$25,000 for a single taxpayer and $32,000

for a married taxpayer) you then pay no tax on your Social Security income.


For $50,000, Get $5,829 Every Year!!

 

It is possible to get a safe return on your money with an immediate annuity. 

An immediate annuityis simply the payment of a premium to an insurance

company.  In exchange, the companyprovides you a monthly income for life.

You cannot outlive this income!

Here's an example:  A 76 year old gentleman paid $50,000 in premium

to an insurance company.  He now receives $485.80 per month, every month. 

That's $5,829.60 each year of checks in the mail.  For $50,000, where else can

you get a guaranteed $5,829 every year for the rest of your life?  Regardless of

how long this man lives, he gets his check every month.  And if he dies early,

his beneficiaries will receive the 485.80 each month until the $50,000 in payments

have been received in total.  This is called the "installment refund" provision. 

There is no way to lose the initial amount of money on such an annuity,

yet payments continue for life.  This can be a very good way to get a

guaranteed return on your money.