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Sound Financial Planning with Insurance and Annuity

Insurance should be a very important aspect of anyone’s sound financial plan. When certain occurrences like death, sickness, accidents occur, it is important that one has insurance to protect them and their loved ones. The insurance decision one makes and the kind of policies chosen depends on a number of things. to get the most appropriate insurance policy, one should look at their age, economic situation and their family. For instance it is not wise for a young person who is just starting on their first job to get an annuity kind of insurance.

Insurance companies issue a type of policy called annuity that allows a person to save up money for retirement. Small cash payments can be made in this kind of policy or one can choose to do a lump sum one off payment. Your contributions are guaranteed to earn interest over time according to the interest agreed upon. The benefits of having a n annuity is that you will have a stream of income after a period of time.

Other people who can benefit from annuities are winners of lottery games and those who have won large cash payments. Once a contract is signed, and an amount is agreed upon, then this large sum of money is released to the owner as a steady flow of income.
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The two commonly used terms with this policy are accumulation and annuitization phase. When one is paying in to the account and no payments are being done, this phase is known as accumulation. The annuitization stage is when the client will start receiving some steady income from the account.
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The people more suited for annuities are the older and more financially stable individuals. The reason for this is that one can be charged with penalties for premature withdrawals and the money is illiquid. It is therefore not suitable for younger individuals who constantly need liquid money.

There are a number of other policies best suited to a younger individuals day to day life. Some of these policies have to do with insuring their young children’s future education, health insurance and also insuring their assets.

Regardless of age sound financial planning should be done by all. The only thing to observe when planning is to gauge the suitability of the chosen policy to one’s life. To get the best policy for your cost, it is good to goggle the many insurance companies before making that choice.

One of the best gifts one can give to their families and to themselves is financially planning for their future.

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