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Seeking Investment Protection

Growth Preliminary results from LIMRA’s U.S. Individual Annuity Sales Survey shows total U.S. annuity sales grew 22 percent to reach $77.5 billion for the quarter. According to the release, “this marks the highest quarterly sales ever recorded” since LIMRA started tracking monthly sales in 2014 LIMRA notes. Investors are seeking investment protection and steady growth. According to Todd Giesing, assistant vice president, LIMRA Annuity Research, “Our research shows fixed-rate deferred annuity manufacturers are, on average, offering interest rates more than four times that of a bank CD, which has made these products a tremendous value for investors looking for protection and growth potential.

In a sense, an annuity is like reverse life insurance. Instead of insuring against death, annuities are designed to protect against “longevity risk,” the risk that you will outlive your income and savings.

Basically, an annuity is a contract between you and an insurance

company or similar financial institution under which, in exchange for a lump sum or ongoing premium payments, the insurance company agrees to make regular payments for either the rest of your life or for

a predetermined number of years.

This important option for covering extended or long-term care has some real advantages, the least of which is a potential tax benefit. Previously, if the insured took an annuity withdrawal to cover costs associated with long-term care needs, they dealt with the associated ordinary income, gains-fi rst tax treatment and paid taxes accordingly.74

On the other hand, there are the annuity expenses and fees, including mortality and expense (M&E) fees and administrative fees.

These charges pay for any insurance guarantees that are automatically included in the annuity as well as the selling and administrative expenses of the contract. Annuities can be classified as either immediate, deferred, fixed, variable, or indexed.

74 “Understanding the Different Types of Annuities,” insuranceandestates.

com, updated June 1, 2019,

- Excerpt from "How Not to Tear Your Family Apart"

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