What Do We Know About Annuities and Life Insurance? A Blog Post From Cabana Financial

3 years ago

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Over the past decade we’ve entered an environment of low interest rates on fixed income products, and because of that many advisors have looked to alternate sources of retirement income. Two products that have been used as alternatives to more traditional bond portfolios are annuities and life insurance.

When considering how we might produce income in our retirement understanding annuities and life insurance can be extremely important.

What do we know about annuities?

  • Annuities can provide contractual guarantees on how much income can be produced for the life of a client, and potentially their spouse: annuities are a conservative route because the income is guaranteed, but comes with taxation of the income that is provided.
  • In an annuity you do not have to prove your insurability: most clients fund an annuity in one single lump sum, which not everyone can do.
  • In some cases an annuity can be the only way for an older individual to participate in these alternate strategies because they cannot accept investment risk and cannot afford the much higher life insurance premiums that come along with the old age.

What do we know about life insurance?

  • By over funding, or putting more money annually into a life insurance contract to simply guarantee the death benefit, you can potentially get tax free income during a client’s lifetime.
  • The income can be taken as a loan from the policy, which makes it tax free.
  • The income amount is not guaranteed and is reliant on the returns of  the stock market.
  • More conservative life insurance policies will guarantee no loss in your policy due to the market, but will cap the potential gains.

Both strategies have a place, but things like age, insurability, and risk tolerance need to be taken into account to provide the appropriate solution.

 Adam Smith, VP Product Development

            Independent Agent: AR, WY 7472721

 

 
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All written content on http://cabanaportfolio.com website (the “Website”) is for informational purposes only. The material presented is believed to be from reliable sources and no representations are made by CABANA, LLC (d/b/a “Cabana Asset Management”) or Cabana Financial, LLC (collectively, “Cabana”) or its affiliates as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.  No party, including but not limited to, Cabana and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of Cabana or its affiliates. Any content provided by our bloggers or authors are of their opinion, and are not intended to malign any religion, ethnic group, club, organization, company, individual or anyone or anything.

Information presented is believed to be current. It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation.

Viewers or recipients of the information herein that do not agree with the term and conditions of use, should notutilize this website or any information contained herein. Decisions based on information contained herein are the sole responsibility of the person viewing the website. In exchange for utilizing the information on this website, the visitor agrees to indemnify and hold Cabana Asset management, its officers, directors, employees, affiliates, agents, licensors and suppliers harmless against any and all claims, losses, liability, costs and expenses (including but not limited to attorneys’ fees) arising from the use of this website, violation of these terms or from any decisions that the viewer makes based on such information.

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Disclaimers

Cabana LLC (dba “Cabana Asset Management” and “Cabana Retirement Solutions”), is an SEC registered investment adviser with offices in Arkansas, Texas and Colorado. Cabana only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at https://www.adviserinfo.sec.gov/.

By using this website the user agrees as follows:

All written content on www.thecabanagroup.com website (the "Website") is for informational purposes only. The material presented is believed to be from reliable sources and no representations are made by Cabana, LLC, Cabana Law Group, or Cabana Financial, LLC (collectively, “Cabana”) or its affiliates as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with a financial advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, Cabana and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of Cabana or its affiliates. Any content provided by our bloggers or authors are of their opinion, and are not intended to malign any religion, ethnic group, club, organization, company, individual or anyone or anything.

Information presented is believed to be current. It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. You should consult with a financial advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation.

Viewers or recipients of the information herein that do not agree with the term and conditions of use, should not utilize this website or any information contained herein. Decisions based on information contained herein are the sole responsibility of the person viewing the website. In exchange for utilizing the information on this website, the visitor agrees to indemnify and hold Cabana, its officers, directors, employees, affiliates, agents, licensors and suppliers harmless against any and all claims, losses, liability, costs and expenses (including but not limited to attorneys' fees) arising from the use of this website, violation of these terms or from any decisions that the viewer makes based on such information.

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