Keeping your family safe from financial strain is always a priority. While a life insurance policy will supplement their income if something happens to you, it’s not the only investment you should make. Adding an annuity will increase your earnings during retirement, letting you lead a comfortable lifestyle. Before you purchase an annuity, here’s what you need to know about these products.
How Do Annuities Work?
Annuities are investments that you purchase by either paying small sums over an extended time or a single lump sum at the outset. These payments then enter an investment pool, where you earn tax-free interest on the amount you contribute. Over time, this amount grows, increasing your estate and boosting your income once you retire. Like life insurance, annuities can be passed to your beneficiaries, giving them a financial cushion when you’re gone.
Unlike life policies, annuities do not pass to your beneficiaries free of tax. In fact, should you pass away, any remaining distributions from the annuity will be considered part of your general estate and subject to all relevant taxes. Most insurance policies pass tax-free to your beneficiaries, making them one of the best ways to protect your family’s financial future and livelihood.
Ultimately, the best course of action is to purchase both types of products. The standard life insurance plan will protect your family’s interests over the long-term. Annuities are not a replacement for a life policy, but they can supplement your retirement income or grow your estate for future generations.
If you’re interested in annuities and want to build your retirement income without taking on a second job, contact the team at Mitchell Insurance Agency LLC in Texas County, MO. Their experienced agents will work with you to find the best policies for your needs, whether you’re just starting to plan for retirement or already have savings in place. Learn more about their coverage areas online and call (417) 967-2140 to schedule a consultation.