It’s never too early (or too late) to invest in your retirement. Take advantage of the investment opportunities in annuities and indexed universal life policies to watch your money grow. Contact Hometown Financial Group for a personalized consultation.
Annuities are an investment products that you can purchase through an insurance company. They are contracts that say the insurance company agrees to pay you with periodic payments over a span of time. You get to choose when to start receiving payments, but most people begin receiving them when they reach retirement age. Many see this as a way to transform savings into predictable income for retirement.
You fund an annuity through one lump sum or over a few payments. The funding starts the accumulation phase. Depending on how long you deferred payments and how you elected for the money to gain interest, your balance will grow over time. Annuities have a surrender phase before you are scheduled to receive payments, and if you take out money during that time, you will pay a surrender charge. Once you begin receiving payments, you enter the annuitization phase.
Fixed annuities grow based on a set rate of return. Variable annuities invest the funds into different stock market subaccounts, and you are guaranteed a minimum payment in retirement once you begin receiving payments. Indexed Annuities track the rate of return for stock market indexes, and promise a guaranteed minimum interest rate.
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Index universal life insurance provides dual benefits. The death benefit standard to all life insurance is guaranteed to go to your beneficiaries once you pass away, as long as you have continued to pay your premiums. The other benefit is the cash value, which grows over time by following the performance of a stock market index.
Index universal life policies are one of the most cost-effective life insurance policies in the early years. Your premiums pay for the cost of insurance and administrative fees, then the remainder is put into an account called the cash value. That cash value will grow based on the stock index’s rate of return, with a guaranteed minimum interest rate and a cap on the gains.
The cash value is for your use during your lifetime, and you do not have to pay capital gains taxes on withdrawals or when you borrow against it. As your cash value grows, it can help to offset the rising cost of insurance. This potential for growth and flexibility is a major advantage for index universal life policyholders.
When preparing for retirement, you want to make your money work. Help your money stay ahead of inflation by making smart investments that have the potential for growth with minimal risk. To learn more about retirement options at your stage in life, speak with a licensed advisor at Hometown Financial Group.
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