Posted by "What is an annuity and what is its use?Is the American annuity insurance?"In order to answer these questions from consumers, insurGuru™️ Insurance Academy"Mr. Annuity Column"In, we will useThe most accessible language, In 3 minutes, help consumers understand the following knowledge about American annuity insurance.
Topic of this issue: Introduction to American annuity, American annuity system, what is the American annuity?
- Is an annuity insurance?
- What exactly is an annuity?
- Who is buying an annuity?
- How does U.S. annuity work?
Is an annuity insurance?
Annuity, called Annuity in English, is a type of insurance, and we often call it "annuity insurance".
Since it belongs to insurance, annuity insurance also has the concepts of "holder" and "insured". "Holder" is the person who pays the premium for annuity insurance. Generally, American insurance companies will require that if the holder and the insured of the American annuity insurance are the same person, they are called "Annuitant" in English.
We takeAmerican Annuity Insurance和American Life InsuranceTo comparein the traditional conceptLife insurance means that after the insured is gone, the insurance company pays compensation; while for annuity insurance, as long as the insured is alive, the insurance company will continue to pay the benefits. Only when the person dies, the payment of the annuity insurance will stop. .
There are also some American annuity insurances that allow the insured to designate a beneficiary. When the insured dies, the money left in the annuity insurance account will be reserved for this beneficiary.
What exactly is annuity insurance?
Annuity insurance is a financial product. We open accounts with insurance companies and deposit premiums. Financial insurance companies provide retirement income on a regular basis as agreed.
This type of insurance is usually paid for by"Year"pay for the unitFriamount, so calledpensionInsurance.
As long as the insured is still alive, by purchasing annuity insurance, we can obtain a guaranteed source of income and avoid "People are alive, but money is not enough"The risk of using annuity insurance to achieve the purpose of life-long endowment.
therefore,Annuity insurance is also called pension insurance.
Who is buying annuity insurance?
The answer may be unexpected, but in reality, almostEveryone is buying annuity insurance.
According to data records, annuities first appeared in the ancient Roman Empire.The government at that time paid Roman soldiers a lifetime annuity as compensation for their service.
due toAnnuity insurance can be used to provide stable lifetime income, Governments all over the worldUse annuity insurance to solve the problem of national pension.Therefore, our life and annuity insurance are closely integrated, but in different countries and regions, annuity insurance usually appears under different names.
U.S. governmentSocial Security Pension Plan, Is a kind of annuity insurance operated by the government and participated by all residents, providing all residents with a basic source of life-long retirement income.The social security tax that is forcibly deducted in everyone's tax bill is the dollar annuity insurance premium we paid to the financial institution of the "US Government".
Japan'sSocial pension systemIt is also based on three types of annuity insurance: national pension insurance, welfare annuity insurance and mutual aid annuity insurance.
In addition to annuity insurance issued by governments of various countries, commercial insurance institutions in various countries also issue annuity insurance products for consumers to purchase.
For U.S. residents,Annuity insurance is an important channel to protect retirement income.
For residents of the global high-net-worth world, in addition to the allocation of local currency fixed income sources, choosing to match American annuity insurance products is an excellent way to build a cross-currency fixed lifetime income allocation.
How does annuity insurance work?
An annuity is made up ofInsurance companyLong-term investment products issued to manage the risk of "people are alive but money is gone".
The process of purchasing annuity insurance is similar to opening a deposit account at a bank: we open an annuity insurance account with a financial insurance company, deposit money (premium), and the insurance company conducts professional investment and financial management according to the selected type of account income.When we are ready to receive money for life (this behavior is called "start annuity/Annuitization"), insurance companies begin to provide life-long income cash flow.
The money in the annuity account can be put in one time or several times on a regular basis, but once you start to receive the money, you cannot continue to deposit money in it.At the same time, the payment cycle can be paid monthly, quarterly, or half-yearly, and it is not necessarily mandatory to receive it on an annual basis.
Although the annuity products of various commercial insurance companies are different, in general, we usually use annuity insurance in the following three ways:
- Deposit a large sum of money at once, or deposit by installments
- Start taking money immediately, or postpone it for a few months, and then take money in a few years
- Choose fixed income, investment floating income, or annuity account type that tracks index income
(>>>Recommended reading: Raiders｜Comparing the price of American annuity insurance product types and the advantages and disadvantages of American annuities (latest edition))
It is worth noting that in the last article, we see that annuity insurance has three different investment growth strategies: "fixed income", "investment floating income", and "tracking index income".For ease of understanding, you can mark them as Whole Life (Savings life insurance), VUL (Investment Life Insurance), and the IUL (index life insurance) These three types of life insurance.The specific annuity insurance types, insurGuru™️ Insurance Academy will be further introduced in the next column.
(>>>Recommended reading:Comparison | Index Annuity and Fund Annuity, Which Annuity Insurance Is Better? (new)）
(>>>Recommended reading:What is a fixed income annuity (Fixed Annuity)?What are the advantages and disadvantages?Is it right for me?）
Article summary
Through insurGuru™️ Insurance Academy’s introduction and knowledge sharing on American annuities, I believe our readers can already answer "What is annuity insurance"In this question. In the actual market, annuity insurance is specifically divided into different insurance company brands and product types, and there are many types.
Please keep in mind that we have been making "LBYB"Before purchasing annuity insurance, understanding the basic knowledge of annuity can help you face financial advisors andAnnuity Insurance BrokerAt the same time, they can participate in the discussion together and make more favorable judgments and decisions. (End of full text)
(>>>Recommended reading:Column｜A must-read for purchasing American annuity insurance!8 common problems and misunderstandings that you are most concerned about )
