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Sound Financial Planning with Insurance and Annuity

. Every sound financial planning should not leave out the aspect of insurance. When certain occurrences like death, sickness, accidents occur, it is important that one has insurance to protect them and their loved ones. there are many factors that dictate which insurance policies and the type one should choose. Some of these factors are age ,family size and one’s economic situation. a fresh new worker would for instance be advice not to go for annuity kind of policy.

An annuity can be defined as a type of policy that is issued by insurance companies and allows one to save money for retirement. Small cash payments can be made in this kind of policy or one can choose to do a lump sum one off payment. After some time, your contributions will start earning some interest according to the rates stipulated by the insuring company. The benefits of having a n annuity is that you will have a stream of income after a period of time.

People who have suddenly gotten large sums of money like winning the lottery or winning millions from court cases can also benefit from having annuities. In this case, these large sums of money can be turned in to a steady cash flow that can be disbursed as agreed upon by the client and the insurance firm.
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The two commonly used terms with this policy are accumulation and annuitization phase. The accumulation phase is when one is doing the contributions and payments have not started. The annuitization stage is when the client will start receiving some steady income from the account.
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The people more suited for annuities are the older and more financially stable individuals. The reason for this is that one can be charged with penalties for premature withdrawals and the money is illiquid. It is therefore not suitable for younger individuals who constantly need liquid money.

Younger individuals can however go for insurance covers best suited for their day to day lives. The young individuals have a host of other issues that need to be insured such as their young children’s education, their family health and also their assets.

It is therefore wise to say that financial planning is important to all regardless of age. One needs to check carefully and choose the most suitable insurance policy for their circumstances. Since there are many companies offering insurance policies, it is good to do a thorough search first on the best one.

One of the best gifts one can give to their families and to themselves is financially planning for their future.