1.How many life insurance policies does State Farm currently have?

Question

2. What are the three differnt types of whole life insurance?

3. How much money does it takes to open each up each of the three policies?

4. What are annuities? Give two examples of annuities?

Answer 1

Question 1. One less after I replaced one today.

Question 2.  Cash value comes in many forms, such as whole life, universal life, variable life, or a mixture of those words together such as variable universal life or universal whole life, etc.

Question 3. the monthly premium

Question 4. Annuities



What is it and what do you need to know? First, annuities are products created by the insurance industry in response to their clients' needs. What kind of needs? The need to protect against untimely death and the second need of a professional expert in the management of money. With life insurance it can protect your family against untimely death. Insurance is a mean by which an individual manages risk against financial devastation of his/her family when he/she dies during the income earing or working years.

With annuities, it also mean by which an individual can manage risk of living too long and running out of money. Annuities are contracts purchased by an individual in which an insurance company pays out monthly payments to the individual beginning on an agreed-upon date and guarantees the individual the payments will continue no matter how long he lives. In other words, you pick a date in the future in which you want to begin payout and from that time on, you will get paid for life!

Therefore, life insurance protects you against dying too soon and annuities protect you against living too long.

There are three types of annuities. The first type is called fixed annuity. Only thing you need to know about a fixed annuity is that the insurance company GUARANTEES the investor that it will pay him or her a specified, pre-determined amount of monthly payout beginning on an agreed upon date in the future. No matter how the portfolio performs, you are guaranteed a rate of return and the insurance company takes on all the risk on how their investments perform. The problem here is that the market may perform above the fix rate and that you may suffer substantial inflation risk or purchasing power risk. On the plus side, if the market performs badly, you are guaranteed a rate of return. It is therefore, the investor receives no risk in purchasing a fixed annuity, no matter how the market performs.

A variable annuity is a contract where your money will grow at a rate base upon the performance of a specified portfolio o f the insurance company. Your investments are not guaranteed a rate of return, your first monthly payment is pre-determined, after the first payment, your payment will vary depending on the portfolio performance. It has every characteristic of a mutual fund such as breakpoints, letter of intent, and rights of accumulation, except that your investments grow tax-deferred. If you purchased a mutual fund by itself, you will owe annual taxes on it unless you put the mutual fund in tax-deferred accounts such as IRAs. You assume all risk on how your portfolio performs. Therefore, the SEC say that variable annuities are securities and that representative selling this product needs a Series 6 license. Fixed annuities are not securities because the investor is not assuming any risk.

The third type of annuity is called combination annuities. This mixes both variable annuity and fixed annuity together. You will receive a fix amount and a variable amount in attempt to hedge against both inflation (variable side) and deflation (fixed side). This is good for someone who wants growth in his or her account but is concern that the market will go down. How much you want to invest into fixed and variable annuity is up to you. You may put 50% into fixed and 50% into variable, 25% into fixed and 75% into variable, or whatever you are comfortable with.

There are two phases of annuity contract. First phase is called the Accumulation Period. This is the time where you put money into the contract and let it grow tax-deferred. The second phase is called the Annuity Period, which is the time you begin receiving payout.

Since your investments grow tax deferred, if your annuity was part of a retirement plan such as 401k, 403b, IRA, pension plan, etc, you will owe income tax on the entire balance at the time of withdrawal. These plans are known as qualifed plans because your investments were pre-taxed, meaning you didn't pay any taxes on your income yet.

If your annuity was purchase by itself, you will owe income tax only on the earnings. These plans are known as non-qualified plans because your investments were made after-tax dollars, meaning you paid taxes on your income already.

What do fixed annuities and variable annuities have in common?

1) Both accounts grow tax-deferred.

2) Upon withdrawal, only earnings in the account will be taxed. Not your contributions.

3) Both guarantee income for life. This is known as the mortality guarantee.

4) Any early withdrawal before age 59 1/2 will result in a 10% tax penalty.

5) Both are long term investments such as mutual funds.

Common question I hear is how does the insurance company stay in business if they guarantee payments for life? Because for every person who lives beyond their statistical life expectancy, there's a person who doesn't reach that age. So, if you live longer than expected, you are getting paid more than what you are suppose to do. However, if you die sooner than expected, payments will stop.

What if you die during the Accumulation Period? In most variable annuity contracts, they contain a provision that is known as the Death Benefit Provision. That means your beneficiary will receive a death benefit that is guaranteed at least the amount you have put into the account. So, even if your portfolio has done badly and you lost value, your beneficiary will receive a death benefit by the total amount you have put in. If the investment has made some earnings, these earnings will be included in the death benefit. For example, lets say you only put in $10,000 into your annuity. At the time of your death before the payout begin, the value of your account was $20,000. So, your beneficiary will receive $20,000. Your beneficiary will be liable on the taxes that are owed on the earnings, which is $10,000 ($20,000 - $10,000).

If the portfolio perform badly and the value of your account was $8000 at the time of your death, your beneficiary will receive a death benefit of $10,000.

What if you die after the accumulation period (or during the annuity period)? Well, at the time you were filling out the contract with your registered representative, they were several settlement options you can pick. One option is where you keep all the money to yourself. The other options shares your investments to a beneficiary in the event of your death. To view these different settlement options, click here. Please note: When the payment begins, you can not change your settlement option. You are stuck with that decision for life. If you want to change it, you must notify the company within 30-60 days (check your contract for actual time) before the scheduled beginning payment date.

Answer 2

1. Don't know.  Don't work for them.

2. There are more than 3 types/combinations of whole life insurance, and the number grows every few years.

3. Dependent on amount of coverage, age, height, weight, gender, for some companies cultural background.

4. Annuities are ways of systematically eliminating money.  They grow at either a fixed rate, or a variable rate depending on the type.  In either case, unless there are provisions in it to counteract this, once they start paying out, the continue till the money runs out or a set period of time.  If you die before that happens, usually the company that manages the annuity keeps the money.  If you die BEFORE it begins paying out, your family gets the money.

It is what is known as an aleatory contract.  Die to soon, they win.  Die to late, they loose.