Insurance World

Annuities can provide a steady flow of retirement income. But there are many types of annuities and not all of them are right for everyone. Insurance companies and agents are sometimes over aggressive in trying to convince a consumer to buy a particular annuity. Just because an annuity comes with a recommendation doesn’t always mean that it is the right one for a person’s unique portfolio. It is always better to do the research to find the right one for your own situation.

Benefits and limitations of different annuities

By knowing the benefits and limitations of each type of annuity, you can find the right one for your needs. The immediate annuity is a good starting point. With an immediate annuity, the customer gives the insurance company a lump sum cash payment in exchange for a guaranteed monthly income payment that continues until the end of the client’s life. With this type of annuity, the customer cannot outlive the money. The problem with this type of annuity in today’s low long term interest rate climate is that the monthly income payments are not sufficient to justify the original large outlay of principal to buy the annuity.

Consumers shopping for an immediate annuity may also be comparative shopping for a fixed annuity. Many investors who are looking for a hedge against losses in the stock and bond markets look to the immediate annuity which offers a guaranteed return of principal. Conservative investors who normally keep their money in Money Market funds and CDs prefer the higher rates which insurance companies offer on fixed annuities. But because the owner of the annuity can only withdraw 10 percent of the principal a year, this would not be the right annuity for a consumer who needs to be able to withdraw larger amounts. This problem can sometimes be overcome by selecting a shorter annuitization period, thereby increasing the monthly payments.

For consumers who want to maximize growth rates and take advantage of tax deferral, the best option may be variable annuities. Variable annuities can offer the potential of a professionally managed capitol appreciation combined with tax-deferred earnings growth. When the stock market is in a high growth period like the last decade, the variable annuity has been widely sold because of its unlimited growth potential. Additionally since the capitol gains and dividends are deferred until withdrawal, the returns can be much greater. The biggest drawback to the variable annuity is this type of annuity is not guaranteed. Thus, in a major stock market decline the annuity can suffer a significant loss in value.

An investigation of annuities should also include the index annuity. The index annuity is one of the newer annuities to be offered to consumers. The appeal of this type of annuity is the growth potential in periods of rises in long-term interest rates. Index annuities owners benefit from increases in the stock market at rates that are higher than fixed rates. There are stop loss features which protect the principal from big market swings. The annuity is also guaranteed as long as the owner does not cash out the contract before the end of the surrender period.

The Use of Annuities for Retirement

With more people retiring and living into their 80s and 90s, it is important to have a plan that provides both income and growth. Annuities can be valuable additions to consumers financial portfolio. Finding out the different types of annuities and understanding their benefits and limitations can help in selecting the right product for your own financial situation. Whether you are looking for a guaranteed income from an immediate annuity or if you just want a higher return on your savings from an index annuity, annuities offer solutions to help meet your needs.

Does this sound familiar? You’ve saved and saved for that perfect vacation you’ve always dreamt about. You’re in the travel agent’s office, you’ve just purchased your very expensive ticket and she’s saying that you should buy some international travel insurance too. You roll your eyes because you’re sure all this international travel insurance business is nonsense and she’s just trying to get some more of your money. You say no thanks. While on your vacation, you crash your car and get hurt. Guess what? You’ve got to foot all the expenses yourself and because you didn’t want to get international travel insurance.

For those of you who aren’t familiar with it, international travel insurance is a must have if you intend to travel out of your own country. Since you’re not familiar, right about now you’re probably asking what international travel insurance is. Simply put, it is a temporary insurance policy which you buy before you leave on your trip. Typically, coverage lasts the full duration of your trip but, depending on who you’re insured with, your international travel insurance can be extended for up to 12 months.

A lot of people couldn’t be bothered with the added expense but there is always the small possibility that something can happen. A good international travel insurance policy will provide three things: good coverage at a reasonable price, readily available emergency assistance and efficient claims processing. It should also cover most circumstances. Your international travel insurance isn’t adequate if it doesn’t cover medical expenses, medical evacuation, travel cancellation and deferment costs, loss of luggage, rental vehicle expenses, death expenses, personal liability and legal expenses.

There is most often a need for international travel health insurance, to cover medical expenses. This can include hospital stays, medication and doctor’s fees. However, international travel health insurance is a godsend in more critical situations as it also covers ambulance services and emergency-related travel expenses, which is especially important in third world countries where supplies are limited and you may need to be transported to another country.

While you may not think that the cost of such international travel health insurance coverage is justified for a short, weekend trip, if you’re going to be hiking through malaria infested forests over those two days, you might want to think again. Use your discretion. It’s much better to be prepared for a possible emergency than to fall ill or get injured and not have any international travel health insurance coverage.