Life Insurance and Annuities

that of the company. Typical account choices are common stock, bond, mortgage or money-market accounts. If the value of the accounts increases or decreases, so will the amount accumulated. Variable annuities are more risky to the contract owner than fixed annuities, but there is a possibility of greater returns. Other types of deferred annuities combine the characteristics of fixed and variable annuities. Annuities are sometimes sold as alternatives to investment vehicles such as certificates of deposit, money market accounts, mutual funds, etc. There are differences between these products. If you die during the surrender charge period, the surrender charges are deducted from the amount the beneficiary receives. You should consult with your investment and/or tax advisor before making any decisions on purchasing this product. If you die during the accumulation phase of a deferred annuity, an amount usually at least equal to the amount you have accumulated will be paid to your beneficiary. If you cancel the contract, or take some money out of it, there may be surrender charges deducted from the accumulation value. The amount you receive is usually referred to as the cash value. It is usually not a good idea to purchase a deferred annuity unless you are planning to keep it for more than just a few years. Banks and Brokerage Firms Products developed by life insurance companies are sometimes marketed through banks and brokerage firms. The person who sells you a life insurance policy or annuity should be a licensed life insurance agent, and in the case of a variable annuity, a licensed securities dealer. If you purchase an annuity through these sources, you should ask for the name of the insurance company, since they are the ones who will be managing your money. 15