FAQs
Frequently Asked Questions
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What is an annuity?
How does the law protect annuity investments?
In order to safeguard the funds of annuity contract holders or policy owners, state laws demand the insurance companies to meet strict financial requirements. According to these legal financial requirements, the insurance companies are legally bound to set up a reserve, which at all times must be equal to the withdrawal or surrender value of their total block of annuity policies or contracts, i.e., the annuity providing insurance companies must set aside funds equal to the surrender value of every annuity contract in force. Additionally, the state laws also require certain levels of capital and surplus to further protect the annuity holders or policy owners.
How many types of annuities are there?
Broadly, there are two classes of annuities: immediate annuities and deferred annuities, and these two classes have various sub-classes, including fixed deferred, variable and equity-indexed annuities. Variable annuities are directly tied to the stock market, therefore we do not sell these to our clients. Any and all products we use in our estate plans are 100% guaranteed, including principal and interest earned.
What makes annuities different from other investments?
Their tax-deferred status, the avoidance of probate, and the promise of guaranteed income for life make annuities different from other types of investments.
What is probate and why do people prefer avoiding it?
Probate is a judicial process to establish the validity of a will. The process of probate can delay the passing on of assets to heirs. Assets in an estate are subject to probate and can’t be passed on to heirs unless the probate court certifies the validity of the will and authorizes the executor to execute the will.
People avoid “probate” because the judicial process can take anywhere between six and twelve months to conclude, and the legal expenses can be significant. Annuities and life insurance policies are not subject to probate and may be passed to a designated beneficiary directly without going through probate.
What is Whole Life Insurance?
This is life insurance that remains in force during the lifetime of the insured, provided premiums are paid as specified in the policy. Whole Life provides a guaranteed premium, a guaranteed death benefit, and a guaranteed cash value. While a Whole Life policy is in force, you may take out a policy loan against the cash value or receive the cash value (less any policy loans and accumulated interest) should you need to surrender the policy. In addition, a Whole Life policy can pay dividends, which may be used to enhance both the death benefit and the cash value or may be used to reduce your premium payment.
What is Universal Life Insurance?
This is adjustable life insurance that allows flexible premium payments, pays the life insurance benefit if the insured dies before the maturity date, and pays the cash value if the insured is living at the maturity date. A flexible premium is one that may be paid at a scheduled or unscheduled time. When a premium is paid, an expense charge is immediately deducted, and the balance is placed in a cash value fund to earn interest at the current rate. Each month, all insurance expense charges necessary to keep the policy in force are paid internally from the cash value, regardless of whether or not the premium was paid. The cost of insurance will increase each year on the policy anniversary based on the attained age of the insured. This is a non-participating policy on which no dividends are payable.
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Income Planning
Imagine your retirement as a time when you can enjoy everything you love, fully prepared financially to do so. Discover how our certified financial advisors can help you achieve the retirement you’ve envisioned or preserve the retirement lifestyle you’re already living.
Healthcare & Long-Term Care
A common concern among baby boomers is the fear of outliving their savings. With increasing life expectancies and rising healthcare costs, many face the risk of exhausting their assets during retirement. Our team is dedicated to helping you sustain the lifestyle you deserve while achieving your financial goals.
Tax Planning
Planning to reduce taxes is a vital part of your overall financial strategy. Our financial advisors are experts in tax services and planning, carefully considering income taxes, capital gains, and other factors throughout every step of your financial planning process.
Wealth Management
Our wealth management planning is grounded in a philosophy of controlling volatility and eliminating unnecessary fees.
Legacy & Estate Planning
Since we all will eventually pass, it is critical to have a plan to make sure that your hard-earned assets go to your loved ones and charities in the most efficient manner.