Why do you need to plan for financial protection?

Each day we face difficulties in managing our finances. Inflation, taxes, debt, changing interest rates, and stock market swings. Their effect can unsettle our best intensions and our most precious possessions - peace of mind. One thing we can be certain of is that the future will come, whether we are financially ready or not. The key is to have a "Plan".

Financial protection vehicles (a brief listing):

• Life Insurance
• Health Insurance
• Savings Accounts (your bank)
• Health Savings Accounts
• Flexible Spending Accounts
• Disability Insurance
• CD (certificate of deposit)
• Annuities
• IRA (individual or employer based)
• Bonds, Mutual Funds or Stocks
• College Savings Plans
• Real Estate

Annuity Definitions:

Annuities are one of many financial protection and retirement plan vehicles. At this time (2017) fixed and equity index annuities are not considered a security product (such as stocks, bonds or mutual funds).

Annuity: A contract issued by an insurance company that offers the systematic liquidation of principal over a selected period, including payments guaranteed to last for the lifetime of the annuitant. Guarantees are backed by the claims paying ability of the issuer, annuities are long term investments designed for retirement purposes. Withdrawals of taxable amounts are subject to income tax and, if taken prior to age 59 1/2, a 10% federal tax penalty may apply. Distributions may start as early as 59 1/2 years of age or by age 70 1/2.

Annuity (Fixed): Specifies a fixed rate of interest (usually set annually based on the prevailing market interest rates) that will be paid on the amount invested in the annuity. The insurance company assumes the investment risk. Most fixed annuities provide a guaranteed minimum rate of interest for the life of the contract. Guarantees are backed by the claims paying ability of the issuer, annuities are long term investments designed for retirement purposes. Withdrawals of taxable amounts are subject to income tax and, if taken prior to age 59 1/2, a 10% federal tax penalty may apply.

Annuity (Equity-Indexed): Also known as an EIA. An annuity that offers both a guarantee of principal and earnings linked to the upside movement of an equity index.

Annuity (FPDA): Flexible contributions may be made as often and in whatever amounts the contract owner desires; benefits begin one year from the date of purchase. Deferred annuities are normally purchased to defer taxes on growth and accumulation, such as a retirement fund. This annuity is also ideal for educational funding.

Annuity (SPDA): A single premium (lump sum) is put into an account from which the annuitant will draw the periodic benefits (funds) at some specific time in the future. Benefits begin more than one year from the date of purchase. This annuity may be ideal for educational funding.

Annuity (SPIA): A single premium (lump sum) is put into an account from which the annuitant may immediately begin drawing benefits (funds). Funds to be drawn with a year of issue. The immediate annuity essentially does not have an accumulation period.