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Benefits of Having Insurance and Annuity for Financial Planning Insurance should be a very important aspect of anyone’s sound financial plan. Insurance is meant to protect a person and their loved ones in many ways example in accidents, sickness, death, loss of a job etc. there are many factors that dictate which insurance policies and the type one should choose. age economic circumstances and whether one has a family or not can dictate the kind of insurance chosen. annuity kind of policy would not be the best choice for instance for a young new worker . An annuity can be defined as a type of policy that is issued by insurance companies and allows one to save money for retirement. One can either pay in this money in lump sum or in a number of small payments. 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. Other people who can benefit from annuities are winners of lottery games and those who have won large cash payments. Once a contract is signed, and an amount is agreed upon, then this large sum of money is released to the owner as a steady flow of income.
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The two commonly used terms with this policy are accumulation and annuitization phase. There is the first stage where one is just paying into the account and does not get any payments and it is called accumulation phase. The second phase called annuitization is when the client finally starts getting some pay-outs.
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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. Younger individuals are not suited for this kind of policy as most often require liquid cash in their daily dealings. There are a number of other policies best suited to a younger individuals day to day life. 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. Regardless of age sound financial planning should be done by all. Carefully analyzing ones circumstances can help you choose a suitable policy for your financial planning. To get the best policy for your cost, it is good to goggle the many insurance companies before making that choice. When you have a financial plan for the future, you give the best present to your family and yourself.