Annuity Immediate Quote

As you approach retirement you are faced with the dilemma of converting your pension pot into an annuity and understanding how taking some of the many options available (Payment frequency, guarantees, spouse’s pension and indexation of payments) affect the income of the annuity.

An annuity calculator can help make this task easier by allowing you very quickly to recalculate the amount of income received when you add or take away any of the options.

An example of these options affect the annuity income is shown below:

A 65 year old male with a 65 year old spouse and a pension fund of £100,000, taking a single life level annuity monthly in advance with no guarantee would get a gross income of £6,997 per annum.

If the same 65 year old male decided that he wanted his level annuity to continue at 50% of his annuity income to his spouse after his death and add a 5 year guarantee, this would reduce the gross income to £6,395 per annum

If the same 65 year old now decided it may be a good idea to add some indexation to the payments and wondered how this might affect the gross income. If he chose indexation by the Retail Price Index (RPI) then the gross annual income would reduce to £3,784, a very significant drop in gross annual income.

So you can see that by using an annuity calculator it is very easy to play with the options to help you decide which the best annuity is for you.

The above rates are for information only and have been provided by the relevant insurance companies and should be only used as a guide. We taken reasonable care to ensure that the above rates are accurate but we accept no liability for any action arising from their use.

Annuity Rates are subject to sudden changes and only formal annuity quotations issued by an insurance company provided guaranteed rates.

Rising interest rates are another reason to avoid Equity-Indexed Annuities. If you are retired or near retirement, don’t let yourself be talked into purchasing an Equity-Indexed Annuity. If you do, it could easily be a decision you regret for many years to come.

I’ve been called ‘a lone voice in the wilderness speaking out’ about the dangers of equity-indexed annuities. It seems that everywhere you turn there is an advisor or insurance agent telling you an equity-indexed annuity is the greatest thing since sliced bread. Don’t believe them.

I’ve talked at length in other articles about the hidden dangers in Equity-Indexed Annuitiea, but the 3 main reasons are (1) they needlessly require you to lock up your money for a very long time, (2) the majority of your returns are still based on the stock market and (3) the commissions for selling an Equity-Indexed Annuity are so high it creates a tremendous conflict of interest for those recommending them. Rising interest rates are just one more reason. Let me explain.

Equity-Indexed Annuities eliminate your flexibility and control over YOUR money. In today’s post-9/11 world where terrorism is a very real threat, it’s important that you have the ability to make changes to and access all of your money when you need to–without incurring surrender penalties that can be as high as 20%! Locking your money into an Equity-Indexed Annuity for 10-15 years causes you to lose control of all but a small portion of it. Equity-Indexed Annuities don’t offer enough reward in exchange for such a long-term commitment.

The main selling point of an Equity-Indexed Annuity is the ability to participate in the return of the stock market but have a ‘guarantee’ that your money will earn at least 3%. The performance of these investments is designed to come from the stock market, not the guarantee. If you are willing to invest in the stock market, I feel there are better ways to do so which provide downside protection while allowing you to retain complete control and flexibility. (Contact me for more information.)

Rising interest rates is another reason you shouldn’t invest in an Equity-Indexed Annuity. Over the past 3 years, the thought of earning a 3% fixed return on your money didn’t sound too bad. Certificates of Deposit at the local bank have only been paying 1% or 2%. That’s made it difficult for those relying on that income to meet their monthly needs. Equity-Indexed Annuity salespeople have used this as a main selling point.

But things have changed. The Federal Reserve recently increased the Federal Funds interest rate by one quarter of one percent. That may not sound like much, but it’s the first time they’ve raised rates in four years. They also signaled that the economy is heading in the right direction and that they’ll continue to raise interest rates over the next few years as necessary to keep inflation in check.

The interest rates available on Federally Insured Certificates of Deposit (CDs) have already risen significantly. You can earn almost 2.5% on a 1-year CD and over 3% on a 2-year CD. The futures markets project that Federal Funds interest rates could be as high as 3% by the end of 2005. That’s means it is likely that you’ll be able to get a 1-year CD for over 4% and a 2 or 3-year CD for 5%.

Think about it–if you can earn 5% on a short-term, Federally-insured Certificate of Deposit, why would you want to lock your money up for 10 to 15 years with a guarantee of only earning 3%? Especially if you’d have to pay a penalty that could be as high as 20% to get at more than just a small portion of it! It just doesn’t make sense.

For those needing income, now is the time to be patient. Use short-term investments like Certificates of Deposit that mature in 1-year or less. When they come due, chances are rates will be significantly higher and your patience will be rewarded.

When it comes to unexpected death, which is naturally everyone’s favorite subject, term life insurance is the most economic approach to providing your family with financial security. Thanks to low monthly premiums, the amount of benefits offered through it is significantly higher than whole life insurance. But did you know that not all policies are the same or that there are term options that you can include in the your coverage?

The insurance market is filled with various term insurance companies, and each boasts it’s own set of rules, regulations, and guidelines. And rates, levels and options vary from company to company as well. What may seem like a “real bargain” may in up costing you more in the long run if you do not read the policy terms. Check out a few of the things that you will want to keep in mind when determining which plan is right for you.

Annual Renewable Term Annual renewable one is renewed every year. The premium is based upon one year of coverage, but the policy is guaranteed to be renewed for a certain number of years. Premiums increase with age. So, if you make it to the ripe old age of one hundred, expect your insurance premiums to skyrocket under this insurance plan.

Level Term Level term life insurance features premiums that are the same amount throughout the length of the policy period. The longer the time frame of the coverage, the greater the premiums.

Conversion Privileges Various insurance companies offer an option on their term life insurance that allows the policy holder to convert their coverage into a permanent insurance policy-these clauses are called conversion privileges Permanent life insurance builds equity for the insured in comparision with term life insurance which simply offers insurance without the option of cash annuity benefits.

Life Insurance Companies Thoroughly investigate the life insurance company offering you coverage. This is particularly true if you are receiving online life insurance quotes from a third-party website. Visit each company’s website and take a look-see. Is the insurance company listed in your local Yellow Pages? Are there agents representing the insurance agency located in your area? And do they appear to be a viable entity that will be around for a long while?

Compare term life insurance policies and companies before you purchase something. Be as picky about the policy parameters and the insurer as life insurance companies are about insuring you. When it comes to insurance companies, famous names are all apart of the game, but do not let their name recognition lull you into a sense of security. Treat finding the optimum plan as you’d treat finding a really killer pair of shoes-shop.

Senior citizen term life insurance should be better option for you if you decide to get a term life insurance but before go for any term life insurance the first step should be to take care about the plan and other things which you are going to face in future. There are four types of term life insurance now further in that article we will discuss about these four types of term life insurance.

First type, Term insurance that let’s you sign up for coverage without a medical exam. There are so many companies which are not interested in your medical exam but main problem with that case is that you have to face a higher interest rate and other premium installment conditions.

Second type, level term life insurance will allows you to pay same premium every year. The main benefit of that insurance policy in that you will have to pay your premium for full term of policy and no change of benefit for policy. There is the catch of renewal rates increasing drastically it will happen mostly at the time of renewal.

Third type, Convertible term insurance policy will allow you to make your policy permanent any time .Benefit of convertible term life insurance policy is that while updating your policy you will not have to give any medical exam but your premium may increase. Fourth type, decreasing term insurance will give you benefit for life time, but payments are usually the same.

Now you should be well clear about the types of the term life insurances and the difference between them .and find a better online term life insurance for you and secure your life according to your needs. Term life insurance policies are very popular these days and of course and you can get low cost protection for many people online. For senior citizen, age 50 and above, can consider two insurance plans that provide you with monthly payout for the entire lifetime, and to take care of final expenses when the final day comes.

The first insurance plan is obviously the Annuity, the hot topic in Singapore now. So that all about the term life insurance for senior citizens get a fine term life insurance and protect your life from unexpected accident.

The current economic environment provides an excellent opportunity to transfer assets at historically low interest rates, removing future appreciation from your etate. The low rates coupled with discounted asset values have created opportunities to maximize estate tax savings. Strategies such as grantor retained annuity trusts (GRATs), installment sales to an intentional grantor trust (IGT) and intrafamily loans are some of the ways to capitalize on the low rates and depressed asset values.

Each month the IRS issues the Applicable Federal Rates (AFRs), which are a group of interest rates used for various purposes including the calculation of the minimum interest to be charged on certain loans, and for calculating the value of an annuity or remainder interest. Because these rates are at historical lows?? less than half of what they were a year ago, the cost to transfer assets either by loan, gift or sale is minimized (see table below for 2008/2009 comparison). The low cost provides greater likelihood that the value of the transferred asset will grow in excess of the low rate. This allows a gift?tax free transfer of value to heirs, while also removing the estate tax on the growth from the estate.

Comparison of Applicable Federal Rates (AFRs) Feb 2009 Feb 2008
Short Term (up to 3 years): .60% 3.11%
Mid Term (3 ?9 years): 1.65% 3.51%
Long Term (more than 9 years): 2.96% 4.46%
IRS §7520 Rate (used for GRATs): 2.00% 4.42%

Grantor Retained Annuity Trust (GRAT): A GRAT is a transfer of an asset, (typically income producing closely held stock, investments or real estate), to a trust in exchange for an annuity income stream. This is paid to the transferor for a period of any number of years. At the end of the term, the asset passes to the beneficiaries of the trust. The amount of transfer can be structured to minimize the gift value, reserving a taxpayer’s $1M lifetime gift exclusion for other uses. If the transferor does not survive the term of the GRAT, a portion up to the full value of the asset will be included in their estate.

Estate Tax Benefits: The value of the annuity paid to the transferor “freezes” the value of the asset included in the transferor’s estate, removing the future appreciation of the asset from the estate and as a result, reduces the amount subject to estate tax.

Income Tax Treatment: The GRAT is a “grantor trust”, since the person setting up the trust, (the “grantor”) pays the income tax on all income earned by the trust. Payment of tax by the grantor can be Any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used for the purpose of avoiding penalties under the Internal Revenue Code and cannot be used for that purpose.

Example of a GRAT: Joe transfers assets worth $5M to a trust (GRAT) for the benefit of his 2 children, (the term of the GRAT is 10 years). The annual annuity payable to Joe for 10 years will be $556,500, based on the current IRS §7520 rate of 2%. If the assets in the GRAT appreciate at an annual 5%, there will be $1.145M remaining in the GRAT to pass to the children at the expiration of the term. This is a transfer of $1.145M exempt of the gift tax, and provides for an estate tax savings of $572,500 to Joe ($1.145M x current 50% combined federal and state estate tax rate).

Installment Sale to an Intentional Grantor Trust (IGT): This technique involves the sale of an asset to a trust, with the buyer (the trust) paying the seller with installments on a promissory note. The beneficiaries of the trust are typically the children of the seller, but can also include grandchildren and future generations. The trust is a “grantor trust” since it is ignored for income tax purposes, but is recognized for estate tax purposes. Put another way, the person is selling an asset to a trust, which is treated as a sale to themselves for income tax purposes??so no gain or loss is recognized. This is considered a completed sale to the trust, for estate taxes. Prior to the sale, the trust is typically funded with cash or assets equivalent to at least 10% of the sale amount. Although no specific IRS guidance exists regarding this initial funding, this is considered to provide equity to the trust that would normally exist in an arm’s length purchase.

Estate Tax Benefits: The sale price of the asset/value of the promissory note “freezes” the value of the asset that is included in the seller’s estate. This removes future appreciation of the asset from the estate, and as a result reduces the amount subject to estate tax.

Income Tax Treatment: Similar to the GRAT, (because the IGT is also a “grantor trust”), the “grantor” pays the income tax on all income earned by the trust. Payment of tax by the grantor can be considered a tax?free gift to the trust beneficiaries, and allows the assets in the trust to grow without being depleted to pay taxes.

Many commentators have taken the position that if the seller dies prior to the note being paid off, an income tax at the long term capital gains rate can apply on the value of the unpaid balance in excess of the grantor’s basis in the asset sold. The IRS has not provided guidance in this area.

As discussed in the example, if a self canceling installment note is used and the seller dies before the note is paid off, the note balance is excluded from the seller’s estate for estate taxes.

Example of an IGT: Joe sells an asset valued at $5M to a trust (IGT) for the benefit of his 2 children. The trust will pay him $5M over 10 years with an installment note at the February 2009 LT AFR of 2.96%. The annual interest only payments would be $148,000 for 10 years, with a balloon principal payment of $5M in year 10. If the asset owned by the trust continues to grow annually at 5%, there will be $1.28M remaining in the trust for the beneficiaries when the note is paid off. Joe will pay the annual income tax liability on the income earned from the asset owned by the trust. This can be considered an additional tax free gift to the trust beneficiaries, and allows the assets inside the trust to continue to grow without being impacted by income tax.

Also, a self canceling installment note provision (SCIN) can be used on the promissory note, so that in the event Joe dies before the note is paid off, the unpaid balance is excluded from his estate–saving further estate taxes. However, the note balance can be subject to income tax at the LT capital gains rate. The use of a SCIN provision will increase the principal balance or interest rate on the note, in order to compensate for the mortality risk of Joe dying before the note is paid off.

Intra Family Loans: This is perhaps the simplest way to take advantage of the current low rates. A parent can make a loan to their children at the low rates: .60% for a loan of up to 3 years, 1.65% for more than 3 years but not more than 9, and 2.96% for loans longer than 9 years. A child could use this loan for the financing of a new home purchase. Or, if the loan proceeds are invested at a rate of return greater than the interest rate, that appreciation is considered a gift tax?free transfer of wealth, and is outside of the parent’s estate.

As is mentioned above, the promissory note can utilize a SCIN provision to remove the value of the note from the parent’s estate, if the parent were to die before the note is paid off.
For control purposes, the parent could make the loan to the children and the children could contribute the loaned cash to an LLC, in return for an LLC interest. The parent is the manager of the LLC and the investments are made inside the LLC. This allows the parent to maintain control of the assets.

Estate tax benefits: The appreciation of assets purchased with the loaned cash, in excess of the interest rate on the loan, is removed from the estate of the lender. This reduces the amount subject to estate tax. The use of a loan also preserves the lender’s $1M lifetime gift exclusion for other uses.

Income tax treatment: Because the child is making an investment of the cash, even through the LLC structure, they will bear the associated income tax liability. If the child is under age 18 or is a student under age 24, the “Kiddie Tax” rules may apply, subjecting the income to tax at the higher parent’s rate.

Example of Intra?Family Loan: Parent makes a nine year loan of $5M to their two children at the mid?term AFR of 1.65%. The cash is contributed by the children to an LLC. Annual interest only note payments of $41,250 are due to the parents from each child, along with a balloon principal payment of $2,500,000 in year nine. If the money is invested in the LLC and achieves an annual return of 5%, then $1.8 M or $900,000 per child would remain after the note is paid.

Conclusion: After the writing of this article, the March 2009 rates were issued by the IRS. The rates have increased slightly from February to .72% short term, 1.94% mid?term and 3.52% long term, and the §7520 rate of 2.4%.

The current, historically low interest rates used in the calculations of wealth transfers such as grantor retained annuity trusts (GRATs), installment sales to an intentional grantor trust (IGT), and intra?family loans are providing an opportunity for clients to reduce their estates and projected estate tax liabilities. Depressed asset values combined with the low interest rates, provide the additional opportunity to transfer wealth for discounted amounts. If you believe that over the long term, assets will appreciate in value from current levels, now is the time to consider transferring assets to lower your estate tax.

If you would like additional information about these estate planning techniques, or want to discuss our range of Wealth Management services, please contact: Greg Costantino, CFP® ? gregory.costantino@vitale.com or Peter DeIeso, CPA, CFP® ? peter.deieso@vitale.com

A life insurance is a financial product that involves three parties. The first is the insurance provider, the second is the person insured, and the third is the beneficiary. The person insured pays the premiums to the insurance provider, so that a lump sum is paid to the beneficiary in the unfortunate event of the death of the person insured. There are many variations to this basic theme of life insurance.

The insured person can opt for whole life insurance, term life insurance, or endowment insurance. In term insurance the person is insured for a fixed term, namely, 15 or 20 years. It is assumed that after this period the person will not need life insurance as other factors takeover. One could be a reduced number of dependents. The other could be substantial retirement savings.

The insurance provider gives an approximate amount as the premium for a person of a certain age wanting to take a term insurance for a certain period. These are called term life insurance quotes. After testing the person’s health and getting in variables such as family health history, these quotes are modified and final term life insurance rates are arrived at.

Naturally, the policyholder has to say yes to the medical check up considered mandatory by many companies. This makes sure that the buyer is not down with some fatal ailment. He is also questioned regarding his smoking habit as even this can control the number of years he lives for.

You have two options when it comes to paying the premiums or rates. One is the fixed annual premium option, where you pay the same sum each year. The other is the variable premium option, where you pay a steadily increasing sum each year. Though the former is more expensive initially, it is cheaper in the long run. However, if you are tight for cash now, but expect better inflows later, opt for the latter scheme.

Also, be sure you pay your premiums strictly on time. A delay would mean a lapse in validity of the policy and if in this period you meet with untimely death, your beneficiary is left high and dry. Though the policy can be renewed by payment of a small penalty, it would end up going against the main principle of life insurance.

One more point that must be borne in mind is how to choose a good insurance company. It is not true that the one which is charging you the least sum is the best. It is necessary that the company you choose does not shut down in your lifetime itself — no, for it to be any good it has to outlive you. Hence choose the insurance company you feel is financially on a sound footing.

This becomes important if you have decided to let your beneficiary be paid an annuity instead of the entire fortune at the moment of your death. Before you decide on the mode of payment, talk the thing over with your beneficiary.

Now comes the question of how much you should insure yourself for. This can be calculated with the help of various online calculators. They take into consideration things such as your funeral expenses, a readjustment fund, baby sitting expenses, your debts, your mortgages, college tuition fees, a retirement fund for your spouse, especially if they are a home maker.

The premium paid depends on the amount calculated, age and health of the buyer and the length of the term for which coverage is needed.

Insurance policy ought to be bought when the person is young in age, but he need not go for it if he has no dependents.

One more way of cost-cutting is by using the internet for the purpose of getting term life insurance quotes. Online rates involve less overhead charges and hence the company can afford to reduce them as compared to offline ones. People who are short on time have no option but to go for life insurance no exam policies which are inherently expensive. Hence, to lower the rates, take time out for the mandatory health check up by the insurance company.

If all the above mentioned plans have been taken into consideration then you shall surely have an affordable life insurance policy and shall be involved with a sound insurance company as well.