Tee Time

Simply put, an-nu-i-ty (derived from the Latin word annus meaning year)  is the  long-term equivalent of the CD (certificate of deposit) offered by banks.  It’s a contract between you ( the annuitant) and the insurance company to make multiple payments to you over a number of years, for a lump sum given now (immediate annuity) or to start  payments in a number a years ( like when you retire).  The government has given this product an additional enhancement  by allowing the accumulating interest to be tax deferred, meaning that you pay no tax on the annuity as it grows in value.

In addition, for professionals who live in fear of losing their assets in a law suit, the annuity is protected from attachment by creditors.  Can it get any better than that?    So now with the stock market out of favor and investors looking for a safe and secure harbor, guess what is now popular?  The annuity!  Take either the fixed or the variable with one glass of water before bedtime and get the best night’s sleep you have have in years.

I cannot understand why insurance companies have not come up with a better word for their annuity products.  A nice soft and lovable acronym to make the average  investor sit up and take notice.  We already have IRAs, CDs, MIAs, CPAs, SUVs and the NBA.  If more people  were familiar with this product and took the time to understand how it works the insurance industry would have the equivalent of an OFS (out of stock).

With the annuity, your principal is secure and your profit can be guaranteed.  Many retired municipal employees are receiving their retirement checks from annuities set up by their union while they were working.  The only regret these retirees have now  is that they did not dump more money into the annuity while they were working.

But don’t weep, you have not missed the boat. The insurance industry is flush with cash and plenty of annuity products are available for the rest of us.  Now that you have this information, your only sin would be to wait too long, to procrastinate in the belief that you will not get old, that you will never lose your job, that you are just too important to retire or  to be asked to leave, that you are just too big to fail!

MassMutual Services has been in  insurance business since 1857 and is a leader in the annuity business.  You owe it to yourself no, your family, to see how an annuity can change your life.

http://www.massmutual.com/productssolutions/individualsfamilies/producttype/annuities

Duane C. Felton, Esq.

If you are one of those lucky baby boomers looking towards retirement with a nice pension consider this.  When you submit your papers you will be asked if you want the “spousal option” payout.   This is a term used in New York,  but elsewhere it may be referred to simply as the payout option.

Your choice will be to take the maximum monthly payment, which would then end when you die or take a smaller monthly payment and direct  that the balance  be paid to your wife/husband should they survive you or to another beneficiary ( like a grandchild).  

A life insurance policy can be used here to do three things for you:

1. Take the maximum monthly payout
2. Leave your surviving spouse or partner with a tax free death benefit and
3. Save money to boot!

Sound Good?  Well here is how this works:

The  payment difference between the “spouse option” and the maximum payment option can average about $5,000 to $10,000 per year depending on your pension size.  Elect the maximum option and use part of that extra monthly income to fund a  whole life policy. The monthly premiums  on such a policy could then fund a half million dollar death benefit  for your spouse, partner, child or grandchild (yes I love the grand kids). 

Now, the most beautiful part of this plan is that the death benefit will be paid out tax free to the beneficiary, while the pension benefits paid out to a surviving  spouse or partner are taxed as ordinary income. 

You could even get fancy with this idea and direct the death benefit proceeds to a trust fund and from that, distribute the money out to family members, charities or whomever.   Just think how well you would then be remembered!

Call me when you are ready to “kick back”.  It s a beautiful thing I am told.

The Grandson

Life Insurance…me? No not me.  Makes you think about death and no one wants to think about that.  But today’s life insurance products are focused upon life and how we can enjoy it.  Yes I am serious.  Today we are living longer and staying active longer. We want to travel, volunteer, visit our grand children and eat-out during our busy retirement years and for this we need money.

Modern life insurance policies are designed to build up a guaranteed cash value while at the same time maintaining a guaranteed death benefit.  So as you live long into your retirement you can access the rising cash value in your insurance policy.   No,you do not have to pay it back , but your beneficiary will  and because it is a loan, it is not taxed as income (smiling now?). 

The insurance carrier will recover the loan amount from the death benefit, but that just means less money for your beneficiary (who will blow it anyway).

Seriously though, a whole life insurance policy can do two things at once:  Provide guaranteed and protected supplemental retirement income and guarantee  a legacy death benefit for the children or grandchildren.

On the other hand, maybe you are just the average run of the mill procrastinator. If the issue is not up front and in your face, then deal with it tomorrow and tomorrow and tomorrow.  Yes, I have been there and done that. In fact who has not?  However, if you have a family or hope to have one in the future,  think about this:   How well will you  be remembered if you leave your family with no insurance protection to continue or even to improve their lifestyle should you die.   Enough money to payoff the mortgage and to send your children to private school.

And consider this, how poorly and dumb even,  will you  be remembered if you leave your family with no insurance and no replacement for the income they will loose upon your death.

So look at it this way, how do you want to be remembered?

So you have finally decided that you need life insurance to protect your family.  Now, should you buy term or whole life?

Whole Life insurance can be a useful product to protect your family and at the same time to start some retirement savings. a two for one deal as one client has stated.

However,  whole life is more expensive for the same protection, so if you really do not have much income, then term is the better choice. The good news is that you can start with term and as your income grows, you can convert your policy to whole life and start socking away retirement money while maintaining protection for your family.

The advantage of term insurance is that the premium will be lower and because of the lower premiums, they carry no cash value.  One the other hand, the premium for Whole Life Insurance will be higher but the cash value will increase over the years giving you the opportunity to build a retirement nest egg.

Unmarried and living together can become an increasingly risky endeavor as you and your partner accumulate assets and begin to share responsibilities.  Common law marriage is not recognized in New York, so if your partner should die and there is no will, any assets he or she owns will pass to the surviving blood relatives of the decased partner. For example: Suppose you and your partner buy a home and  you each contribute equally for the down payment and closing costs. You even split the mortgage or maintenance bills. However, because you had bad or no credit, your name is not on the mortgage, deed or the lease. Now your partner dies and there is no will. Who ownes the home or cooperative shares?  Not you! By law, all of your partners assets which are exclusively in his or her name will pass to the heirs of the deceased partner.  That  would be, the surviving parents or the siblings of  your partner. They will be fully within their rights to come knocking on the door and ask you to vacate the residence.

So if you are living together either get married or get a will. And while you are at it, get a living will and a health care proxy.

A living will tells your doctor and other hospital personnel whether or not you want certain medically invasive procedures to be undertaken in the event that you are terminally ill or in a coma and unable to speak for yourself.

A Health Care Proxy is a document which allows you to select a competent adult as your representative to make decisions for you regarding your health care.

Most Attorneys and prepare a living will and a health care proxy for you for a modest fee.

Seniors are now worrying that the stock market will not generate the returns they have been used to getting and that they will not have enough money to enjoy their retirement years.

Annuities have been developed by insurance companies to insure a minimum predictable  return on your investment throughout your retirement years.

Mass Mutual now offers a fixed and a variable annuity with a flexible contribution  schedule which can be tailored to meet your insurance needs.

What is an annuity?  An annuity is an investment contract with the insurance company which will guarantee an investment return on the money you deposit with the insurance company.

You decide what you will invest each month  and tell the insurance company when you will want to receive payments or how much you will want to receive per month.

Its that easy. Income taxes are deferred until you actually receive distributions and your money cannot be reached by creditors.