Investopedia / Sabrina Jiang
The younger you are, the lower your premiums will be, but seniors can still get a life insurance policy.
If you purchased the annuity with after-tax dollars, your long-term source of income will be a combination of a tax-free refund of your premiums and taxable earnings. Your insurance company will tell you how much of the annuity payment is taxable.
You can convert your life insurance to an annuity if your life insurance has a monetary price. The annuity will then be invested and generate a source of income based on your monetary value balance. You forgo death and gain advantages from life insurance to gain advantages from a greater source of income and investment guarantees. However, you can’t convert an annuity into life insurance.
Annuities can result in costly payments if you pay them off early. The payment can potentially be 7% or more of your account balance. Annuities lock up your cash for years. They can also expect generous annual payments on their investment and income stream guarantees. Finally, annuities based on investments in the stock market can be confusing and difficult to understand.
The termination of annuities in the event of death depends on the income source option you choose. Payments are avoided in the event of your death if the source of income is based solely on your life. You can also request a minimum number of invoices, for example 20 years. If you die before the age of 20, the remaining bills will pass to your heirs. Adding more promises of revenue streams will lower the monthly payment.
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