An annuity is a contract with an insurance company funded by a lump sum or a series of payments typically to prepare for retirement. Annuity payments are then made to the customer beginning immediately after the lump sum payment or later on in the customer’s life. The annuity payment from the insurer can be set up as a one-time payment or a sequence of payments. Annuities are typically used to replace regular income during retirement, however there are many other reasons to purchase an annuity. It is important to note that annuity income is taxed as regular income, but does grow tax-deferred.
Annuities can be designed as one-payment or a series of payments across many years—some policies extend to the death of the customer and beyond. There are also annuities that continue to send payments to surviving spouses or children. If payments are continuing until death, the payment may be lower, but knowing that you will never outlive the income is one of the biggest benefits of an annuity.
Buy and sell agreements are formalized contracts directly outlining how a partner’s share of a business may be re-designated if that partner were to pass away. Usually, the shares would be offered to the remaining partners or partnership prior to arranging an outside buyout.
Buy-sell agreements are also referred to as buyout agreements, a business prenup, or a business will.
Key Man Insurance is a life insurance policy designed to cover costs associated with replacing a key employee in the case of unexpected death. These policies are also referred to as Key Woman Insurance or Business Life Insurance. The company is the owner of the policy as well as responsible for paying all premiums, and the company receives the death benefit if a death occurs.
Term Life Insurance is a kind of life insurance that lasts for a set term of time. Once this period of time expires, the premium rate is no longer guaranteed, and the policy owner can either decline future coverage or reinstate coverage at an updated premium rate for a new duration of time. If the insured passes away during the term, the policy beneficiary will be paid the death benefit.
Term Life Insurance is generally the most affordable type of life insurance coverage—especially when considering the death benefit to premium rate ratio. The temporary duration of term insurance is the primary difference compared to Whole Life, Universal, and Variable Universal life insurance.
Universal Life Insurance is an insurance policy that will last until the insured dies. A Universal Life Insurance policy will not expire as long as premiums are continuously paid, and Universal Life Insurance policies will function for the entire lifetime of the insured. The premium rate is guaranteed, and when the insured passes away, the policy beneficiary will be paid the death benefit. Universal Life Insurance is generally a more affordable type of life insurance coverage comparable to Term Life Insurance. There is a savings element that allows a cash value to grow within the policy, but the beneficiary will only receive the death benefit. The permanence of Universal Life Insurance is the primary difference compared to Term Life Insurance.
Whole Life Insurance is an insurance policy that will last until the insured dies. A Whole Life Insurance policy will not expire as long as premiums are continuously paid, and Whole Life Insurance policies will function for the entire lifetime of the insured. The premium rate is guaranteed, and when the insured passes away, the policy beneficiary will be paid the death benefit. Whole Life Insurance is generally the most expensive type of life insurance coverage, however there is a savings element that allows a cash value to grow within the policy. The permanence of Whole Life Insurance is the primary difference compared to Term Life Insurance.
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