Trust Beacon to guide you in selecting a suitable policy, whether you are interested in Life, Disability, Auto, Homeowner's, Annuities, or Business Insurance.
An Immediate Income Annuity is like life insurance, but flipped around. You typically pay a lump sum up front to a life insurance company, which then makes small regular payments to you for the rest of your life, no matter how long you live! That's why annuities are often referred to as an income stream that you cannot outlive. Instead of fretting about how long you can stretch out a lump sum, and how long you will live beyond that, now all you have to worry about is how to live within the series of payments that you have traded the lump sum for. Obviously, the bigger the lump sum, the bigger the payments can be.
One important risk to consider here is inflation since the payments are usually a fixed dollar amount and could last for decades. We all know that over time the purchasing power of $1 has diminished.
Also there is liquidity risk. Annuities typically have hefty surrender charges if you change your mind within the first several years (the "surrender period") and try to cash out. Surrender periods of 10 years are common so beware! And then there is the 10% tax penalty on withdrawals prior to your turning 59.5 years old. Note: Beacon Insurance Agency does not provide tax or legal advice. Please consult with your CPA or tax attorney.
The annuity payments you receive include an interest component, so you’re still putting your money to work for you. You have some choices about how the interest rate is determined, including Equity Indexed Annuities where the insurance company credits a higher interest rate if a chosen stock index does well (even though your funds aren't actually used to buy stocks).
In addition to Immediate Annuities, there are also Deferred Annuities where you put your money in over time (the "accumulation phase") and then when you're ready you "flip a switch" and start receiving the annuity payments instead.
There are Single Life Only annuities as well as Joint-and-Survivor annuities for couples, which continue to pay as long as one or both persons are alive. The annuity period can also be limited to a pre-determined number of years instead of the "Straight-Life" method described above. The many benefits available in annuities, as well as costs and risks, are too numerous to describe here, so please come in for an appointment and we will be happy to explain everything. Below are some of the solid insurance companies whose annuities we can quote:
Fidelity & Guaranty Life
North American Company
While there are many annuities to choose from, they're still not for everyone or for every stage of life. We will need to ask you questions about your personal and financial situations in order to determine whether a particular annuity is suitable for you or not before making any recommendation. There are costs to any annuity which we will discuss with you carefully so you understand all the disclosures. When you apply for an annuity, we will supply you with an appropriate Annuity Buyer's Guide that has been approved by New Jersey's Department of Banking and Insurance. An example can be found here.