Annuities are not life insurance policies. They are, in fact, designed to serve the exact opposite purpose. Whereas life insurance guarantees income in the event of your death, an annuity guarantees income in the event that you live longer than you expect to.

What is the difference between life insurance and an annuity?

Both annuities and life insurance should be considered in your long-term financial plan. In other words, life insurance provides economic protection to your loved ones if you die before your financial obligations to them are met, while annuities guard against outliving your assets.

What is a flexible premium retirement annuity?

A flexible premium annuity is an annuity that is intended to be funded by a series of payments. Flexible premium annuities are only deferred annuities; that is, they are designed to have a significant period of payments into the annuity plus investment growth before any money is withdrawn from them.

What type of annuity is life insurance?

A life insurance policy is an example of a fixed annuity in which an individual pays a fixed amount each month for a pre-determined time period (typically 59.5 years) and receives a fixed income stream during their retirement years.

What is the premium on an annuity?

Annuity premiums are the funds that you pay into an annuity. Because annuities are insurance contracts, they use insurance terminology. Payments to other insurance contracts (such as auto or life insurance policies, for example) are also called premiums.

What does it mean to have a flexible premium annuity?

Definition – What does Flexible Premium Annuity mean? A flexible premium annuity is a retirement plan that allows the insured to choose the mode of payment for their premiums and their retirement income. This flexibility allows annuitants to exempt themselves from paying taxes on their premium payments.

Is there a flexible premium deferred annuity rider?

Some insurance companies offer a “flexible premium deferred annuity” rider on their life insurance products at no additional cost. With this rider, you can plan for retirement while filling a life insurance need.

How does a flexible life insurance policy work?

This policy also features a relatively low-risk investment opportunity. The money you earn is deposited into your policy’s cash value account where it grows on a tax-deferred basis. You can access this money anytime or leave it with your death benefit for your heirs.

What is an example of a single premium annuity?

A single premium annuity is one that Martha could purchase with a lump sum. In other words, she would pay the premium or the cost of the annuity all at once. For example, let’s assume that Martha received $100,000 as an inheritance when her aunt died.