An annuity is essentially an insurance product. With deferred annuities, the contract holder can accumulate money over a period of years (the "accumulation phase") by either making an initial deposit and watching it grow, or by making periodic deposits over time.
Funds invested in retirement annuities grow tax-deferred. When you're ready to start drawing on your annuity, you "annuitize" the contract and turn it into an income stream so you receive a series of regular payments each month, quarter, or year.
An Indexed Universal Life (IUL) policy is permanent life insurance coverage with both an insurance component and a cash value savings component. The cash value can be indexed to a financial market index, offering policyholders the upside potential that comes with investing in the markets while still retaining the protection of life insurance coverage.
There are many reasons for choosing retirement protection annuities and IUL products. The most common reason many people use annuities is for channeling their savings into a regular income stream during retirement.
Funds from Social Security and pensions may not be enough to allow you to live the lifestyle you want when you retire. Choosing a retirement protection annuity can give you an additional paycheck every month to supplement those other income sources - giving you the funds necessary to travel, pay your expenses each month, buy gifts for loved ones and more.
Similarly, IUL policies offer you the option of accumulating cash inside your life insurance policy - cash that you can use for any purpose.
There are fees and expenses associated with any type of retirement planning vehicle, and retirement protection annuities and insurance products are no different.
When you work with Symmetry Financial Group to explore retirement protection options, we'll explain the fee structure of various products and answer any questions you have to help you make an informed decision.
Most annuities used for retirement protection are "guaranteed issue" products that require no underwriting, so nearly everyone qualifies.
Because of the life insurance component of IUL policies, you need to meet the insurance company's underwriting criteria in order to qualify for the product. Additionally, many IUL policies don't require a medical exam, which can save you some time overall.