Basic information about Annuities.

Annuities can be a complicated products, we will go over the basics of annuities now and later get into the more specifics about the different annuities available.

 

An annuity is a contract that provides income for a specified period of years, generally used to provide income for retirement years. Keep in mind annuities are long-term financial products. Annuities are unique in their ability to provide lifetime income, therefore provides protection against the possibility of outliving one's income. The Annuitant is the person who receives benefits from the annuity.

 

All interest grows tax-deferred, allowing you to potentially accumulate wealth faster than if taxes were due on interest each year. Tax deferral means that any amount earned in an annuity is not taxed until earnings are withdrawn. This means interest, dividends and capital gains can accumulate without being subject to current income taxes. Taxes are paid at ordinary income rates, regardless of how long the annuity has been held. Tax deferral ensures that you do not pay a dime on your interest earnings until the funds are withdrawn. Annuities also outshine CDs and other savings plans in terms of the yield you will see on your investment.

 

Annuities are investment contracts where you make payments either in a lump sum or in a series of contributions over a specific amount of time to help provide income upon retirement. In addition to being used for retirement income, they can be used for any situation that requires a steady stream of income at some point in the future, such as to fund a college education.

 

To sum it up – in short. While life insurance protects against premature death by creating an estate, annuities protect against outliving one's income by liquidating an estate. Annuities consist of funds set aside for a certain period of time, then the money is returned in increments as guaranteed income repaid.

 

More ANNUITY information

 

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You can also Direct Message (DM) on twitter (RitaAtNCLife) leave a comment here with your question or see the North Coast Life website for more information.

 

IRA – Individual Retirement Account

IRA's provide a tax deferred or tax-free way of saving for retirement.

 

Traditional IRA: Your money grows tax-deferred until you withdrawal it from your account. Growing tax-deferred gives you a tax deduction which in turn reduces your taxable income. Basically you are not paying tax on the income you set aside in a Traditional IRA. This means you will not have to include interest, dividends, or capital gains from your IRA in your annual income.

 

Now when you decide to make a withdrawal, funds will be subject to regular income tax, as this is now considered ordinary income. Additionally if you withdrawal before age 59 ½ a 10% penalty will be included to the income tax taken at the time of withdrawal for early distribution.

Another age requirement is a minimum distribution must be taken after age 70 ½.

 

Roth IRA: Give more flexibility but are not tax-deductible. Contributions can be withdrawn at anytime without penalty or tax, along with eliminating the need to take a minimum distributions after age 70 ½ as the Traditional IRA does. Disadvantage is you do not get the income tax deduction when you contribute to the Roth IRA. There is adjusted gross income limit of $100,000 so this is not for the high level corporate executives. Although coming in 2010 this income limit with be lifted. More good news, is those taking advantage of this 2010 conversion period will be able to spread out the time in which you report your income. Therefore you can report half the income from the conversion in 2011 and the other half in 2012, spreading out your tax obligation.

 

 

Choosing IRA's can be complicated it is always best to seek qualified guidance when making this important decision.

 

While at work, I handle a number of Live Chat inquiries that come across a Life Insurance website. As a result of this job, I get some unusual questions presented on my screen. Recently I was asked if someone could purchase life insurance for a parent without their (the parent's) consent?

 

At first I get a big chuckle from the question, then I begin to think why would you want to do such a thing? Are you up to no good? I do not know of any insurance company that would issue such a policy without the proposed insureds signature. The only situation that I can think of that would require no signature from the proposed insured is when a parent obtains a policy on a minor child to cover the funeral expenses that may be a hardship if the unfortunate happened to the child.

 

To the best of my knowledge there is no such product available from any reputable insurance company. If you know of such a thing from personal experienced or know of someone who has, I would be wondering if the proposed insured had their signature forged on the insurance application. If there is an insurance company out there that says they offer such a product, I would also be wondering how legit that particular company is?

 

The basic requirement for life insurance is the person who buys a policy must have an insurable interest of the person being insured. Insurable interest is having an interest in the survival of the person who is being insured. For example, a wife has an insurable interest in her husband's life, because she would be financially harmed if he were to die. Another example, a company owner has an insurable interest in a key employee's life. The talents and experience of key individual(s) account for much of the business success. Therefore the company would suffer financially if the key employee were to die.

 

Learn more about the different Protection Types of Life Insurance

 

Common Guidelines to Life Insurance:

 

Young Families: Are you considering starting a family? Life Insurance should be obtained if this is the case. At this point in your life it would be to your advantage to obtain life insurance since rates are lower at younger ages and can be locked in for, a predetermined amount of time.

Established Families: If you have family and/or others who depend on you, then there is no question that you have a definite need for Life Insurance. This is not limited to the person who works outside the home. Life Insurance needs to be considered for the person working in the home. Think of the costs involved to hire someone to do the domestic chores, home budgeting, child care, etc. This would cause significant financial burdens for the surviving family and/or loved ones.

Children: The main purpose to obtain Life Insurance on a child is if the unexpected death of a child would become a financial burden, such as paying for the medical costs or funeral and burial expenses. The advantage to obtaining a policy on a child is the rates are very low. Some adults still have the policies that their parents obtained on them when they were young; although the policy may not be large it can be very beneficial.

Young Single Adults: A few of reasons for a single adult to need Life Insurance would be to pay for their own funeral costs, outstanding debts or if you financially support an elderly parent or other person. Term Life Insurance works well for young adults as the rates are very affordable. At this point in your life you should carefully consider permanent Whole Life Insurance. This is one of the best times in your life to obtain a Whole Life policy since the rates are usually better at a younger age and you can use the cash value that builds in these policies to help fund your retirement years.

Working couples without children: Having life insurance in this situation is beneficial in covering the funeral costs with an unexpected death of your significant other. Perhaps one spouse contributes more to the household income or would want to leave their loved one in a better financial position such as paying off the home mortgage.

Retired and Elderly. For those of you in this age group, Life Insurance is beneficial in paying for funeral costs, medical bills and estate taxes. Maybe you have thought about leaving a legacy gift, charitable gift or funding a grandchild's education. All of these scenarios and many more can be obtained through a Life Insurance policy.

Whatever your situation, once you know that you have put the safeguards in place for your family and loved ones, you will be able to spend more time enjoying your life, and not worrying about it. Provide the Gift of financial stability to your family - Apply Today!

 

 

Simply put... You need Life Insurance if people depend on you for financial support. This could be your spouse, children, or dependent parents.

 

Common Needs for Life Insurance:

 

Replace your income. If people depend on your income, your death causes a financial shortfall. Life Insurance can replace that income for them. (Especially those with minor children as dependents.)

Replacement care for others. If you provide the daily care of a household, your contributions have financial value and your death would cause need for replacement care. Again, this is true with small children, and also extends to those responsible for the care of an elderly relative or an older child with special needs. Life Insurance may be needed to provide continued care.

Pay for expenses as a result of death. Some examples of these expenses include cost of burial (funeral service, cemetery plot, casket, hearse, minister, cosmetology, grave marker), legal fees / estate taxes, credit cards, mortgage loan, etc.

To cover your business or key employee of your business. If you or someone in your business provides a critical contribution to the business there may be serious consequences if this key person would suddenly die. Life insurance may be needed to enable the business to survive this transition, or there may be a need for cash to enable remaining business partners to buy out the heirs of a deceased partner.

Fund a charitable interest or create an inheritance. Even if you have no other assets to pass on, you may have a desire to support a charity or create an inheritance. Life Insurance can significantly help fund these interests.

Provide supplemental income later in life. Most people know about "Term" Life Insurance, but there is also Permanent Life Insurance (Whole Life). Permanent Life Insurance builds cash value which can be used in various ways. In some instances it may make sense to fund a policy so that it contains cash value which can be withdrawn or borrowed during retirement.

 

Obtaining life insurance on yourself so that others will be taken care of is one of most selfless and loving acts that you can do. Ensure the future of your family – See my FREE term quote NOW!

 

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This just may be what your 401k needs.

 

 

Roth IRA Conversion

 

2010 will be here before we know it. With all the uncertainty that we are experiencing these days within the financial realm one thing that IS CERTAIN pertains to the Roth IRA. The 2010 conversion period is just around the corner. To help with understanding what your options are and the NEW 2010 eligibilities here are some things to consider when making a decision about your IRA.

 

Traditional IRA -vs- Roth IRA

(pay taxes later) (pay taxes now)

 

Both IRAs provide a way to save for your future

So which one is better? In this comparison your answer is: Go with the one that will let you pay your taxes at the lowest rates. If you expect your tax bracket to be lower today then in the future, then a Roth IRA Conversion is a good idea for you right now.

Traditional IRAs are funded with your pretax dollars so your tax bill is deferred until the money is withdrawn in your retirement years. Your contributions may qualify as deductible contributions which reduce your taxable income in your Traditional IRA.

Roth IRAs tend to be funded with after tax dollars so your withdrawal dollars are federal tax free at the age of 59 1/2 . So ultimately all of the future gain will be tax free, provided you have had the Roth IRA for 5 years, your distribution age is 59 1/2 or funds are for a first time home buyer.

2010 opens the door to more people for the Roth IRA Conversion. The Adjust Gross Income limit which has been at $100,000 has been lifted for 2010. More good news, is those taking advantage of this 2010 conversion period will be able to spread out the time in which you report your income. Therefore you can report half the income from the conversion in 2011 and the other half in 2012, spreading out your tax obligation.

Contact your North Coast Life Representative to learn what option is best for you and your situation. 800-541-5858

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