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What are Annuities?
An annuity is a product which can provide you with an income for as long as you live. There are two types of annuities:
The first is when you pay a lump sum to a life insurance company, and they pay it out to you right away in periodic installments. This type is known as an immediate annuity – the payments to you start immediately.
The second, and more common, is where money paid by you is accumulated at interest over a period of time. If you choose, the accumulated amounts will then be paid out to you in periodic installments, usually when you retire, in order to supplement your retirement income. This type is known as a deferred annuity – the payments to you are deferred for a number of years. Currently, a deferred annuity may have tax advantages, in that the interest credited to your funds is deferred from current taxation. That is to say, income tax is not owed until you start receiving distributions from the annuity.
Both types of annuities offer you certain options for receiving your income. It is usually paid to you monthly. The most common options are:
Life Annuity – The company will pay you an income for as long as you live.
Period Certain Annuity – The company will pay you an income for a specified amount of time (5 years, 10 years, 20 years, etc.).
Life Annuity with Period Certain – The company will pay you an income for as long as you live, but if you die before the period certain that you choose, the income will be paid to a survivor you designate until the end of that period.
Joint and Survivor Annuity – The company will pay an income to you during your life, and after your death will pay a percentage of that income (50% or 75%, for example) to a survivor youdesignate during, his or her life.
DEFERRED ANNUITIES
In recent years, there has been an increasing emphasis on deferred annuities. If you are going to make a good choice when you buy a deferred annuity, you need to understand which kinds are available. If one kind does not seem to fit your needs, find out about the other contracts which are described in this guide. If you need more information than is given here, you should check with a life insurance agent or company, or consult books on life insurance which are available at your public library. Also, the Department of Insurance has a toll-free hotline listed in this brochure to assist you.
CHOOSING THE TYPE OF DEFERRED ANNUITY
There are two basic types of deferred annuities – fixed annuities and variable annuities. There are several variations on them.
Fixed Annuities guarantee that your money will accumulate at a minimum specified rate of interest. However, the company will pay you a higher rate of interest if its investment experience is better than the minimum guarantee.
Variable Annuities differ from fixed annuities in that contract owners direct the distribution of their money among several different accounts and their accumulated funds reflect the experience of those accounts rather than 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 may be differences. 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 not usually a good idea to purchase a deferred annuity unless you are planning to keep it for a more than just a few years.
AVAILABILITY OF DEFERRED ANNUITIES
Deferred annuities are available through life insurance agents and, increasingly, through banks and brokerage firms.
Agents
Life insurance agents are licensed by the State, and may represent one or more companies. If you use an agent, choose carefully. Agents earn a commission on your business and should do more for you than just sell you an annuity. They should advise you and answer all your questions. If you are considering the purchase of a variable annuity, the agent should also have a license to sell variable products, which are considered to be securities, and you should receive a prospectus describing the investment alternatives available to you.
Banks and Brokerage firms
Products developed by life insurance companies are sometimes marketed through banks and brokerage firms. The person who sells you the 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.
FINDING A GOOD BUY
Guarantees
A fixed deferred annuity always contains guarantees. For example, it might guarantee that the interest rate on the funds accumulating in your policy will be at least 4%. The guarantees are conservative, so that the company will be able to pay you the guaranteed amounts, even if conditions are very bad. Today, most companies pay greater amounts than they guarantee, but do not promise to continue to do that indefinitely. If you are shown any tables of numbers illustrating how the annuity might grow in the future, you should keep in mind that the non-guaranteed numbers could turn out to be lower or higher than those shown.
You should also ask questions about the amounts you will receive if you decide to surrender your annuity, and find out the difference between the accumulation value and the amount you will receive.
HOW TO PROTECT YOUR MONEY
Be sure to check out the industry rating of any life insurance company you are considering (as provided by independent rating services) before committing your funds. Also make sure that your life insurance company is licensed in California. Owners of annuities issued by companies licensed in California may be partially protected in the event of the failure of the insurer by the California Life and Health Insurance Guarantee Association. Any portion of the contract not guaranteed by the insurer, or under which the risk is borne by the contract holder is excluded.
INFORMATION SOURCES
Additional information about life insurance companies can be found by reading insurance company rating services reports. Five major insurance rating companies grade insurers on their financial health and ability to pay claims. These companies are:
A. M. Best
Standard and Poor’s
Moody’s Investor Service
Duff & Phelps
Weiss Research
You should check two or three of these services to get a good look at the company’s condition. They can usually be found in your local library.
What is Gap Insurance?
Gap insurance complements a high-deductible healthcare plan by helping pay for medical costs and expenses that add up before a plan’s deductible has been reached. Combining gap insurance with a high-deductible plan can be a better choice than buying a low-deductible health plan alone. ASR offers a few different types of gap plans: Personal Accident Insurance and Hospital Recovery Insurance.
Personal Accident Insurance?
Accidents happen…
1 in 8 Americans each year seeks medical care for injuries. 1
Falls are the leading cause of accidental injuries among Americans in almost every age group. 1
90% of young athletes said they have been injured while playing a sport. 2
1 National Safety Council, Injury Facts, 2016 Edition
2 Safe Kids Worldwide, Changing the Culture of Youth Sports, August 2014
As more people are opting for high-deductible health plans to lower premiums, they are at-risk financially when an accident happens. Personal Accident insurance steps in to help pay for out-of-pocket costs that result from an accident that requires medical care. By pairing it with your medical plan, you can have peace of mind that you and your family has 24/7 accident protection.
LifeSecure Personal Accident Overview
Hospital Recovery Insurance
Similar to Personal Accident Insurance, Hospital Recovery Insurance complement your traditional medical coverage and extends your protection. It’s affordable insurance to help assist with unexpected costs after an inpatient hospital stay. You receive additional benefits regardless of any other medical insurance you have.
LifeSecure Hospital Recovery Overview
Critical Illness Insurance
Did you know…
The odds of developing cancer in a lifetime are one in two for men and one in three for women. 1
About every 40 seconds, someone in the U.S. will suffer a heart attack.2
1 American Cancer Society, Cancer Facts & Figures 2017.
2 American Heart Association, Heart Disease and Stroke Statistics, 2017.
When a critical illness strikes, lost income, medical deductibles, out-of-network office visits and uncovered treatments can lead to financial hardship for your family. With a Critical Illness policy, you can supplement benefits beyond your medical plan with coverage your family can rely on. It provides a lump-sum payment when you’re diagnosed with a serious disease to help ease the strain on your finances so you can focus on recovery.
LifeSecure Critical Illness Overview
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Life Insurance FAQ:
How Do I purchase a policy?
First, an application is sent for your signature. At the same time a medical examiner contacts you to set a convenient time at your home or office to take blood and urine. On larger amounts or older ages, a resting EKG or blood pressure check may be required. It is important to give blood after a 12 hour fast so it is better to do the exam in the morning. Once the insurance company receives the exam results, the application, and any additional doctors records that the insurance company obtains at their expense, we receive an offer. Every expense in this process is paid for by the insurance company!
How Long Does this Process Take?
If no doctors records are ordered, 3 to 4 weeks( Less if there is an urgency). If doctors records have to be obtained, 4-7 weeks since we are dependent on the promptness of the doctor.
If I apply and don’t get the rate i requested, what happens?
The company many times will make another offer. If our office thinks we can get a better offer from another company, we will ship your file over there.
Are these Stable Companies?
Every company our agency uses has a strong financial rating as determined by the various rating agencies such as A. M. Best, Standard and Poor’s and Moody’s Bond Ratings.
What is “Preferred Plus,” “Preferred,” and “Standard?”
Insurance companies are learning more and more about identifying their risks. Since cancer and cardiovascular disease are the two leading causes of death where the risk can be lessened by the individual, companies zero in on these risks. Those that qualify for the super preferred would be less at risk, then the preferred, then the standard. These companies look at height and weight, blood pressure, cholesterol(good and bad), family history(relatives dying before 60 of CV disease or cancer), personal history of cancer and CV disease, and smoking history. A more specific guide is as follows:
What if I Don’t Fit Into Any of these Categories?
If an individual has one or more of these risk factors, they may still qualify for preferred or standard. If even standard is out of the question, there are some highly rated companies that will still take the risk. Insurance companies fear the unknown. If they can identify what those risk factors are, there is a greater chance they will offer a policy. For example, someone just finds out he has a blood pressure problem and his doctor is trying different medications to bring it under control. Until the blood pressure is under control, this remains an unknown to the insurance company. Once under control it could be a preferred with some companies, standard to others.
Do Most Companies Treat Pilots the Same Way?
No. If a pilot has enough hours to lower the risk to the insurance company, it is possible to get preferred. Two of our companies with the lowest rates will consider preferred.
Do Insurance Companies Treat All Tobacco Smokers the Same?
Cigarette smokers that smoke less than a pack a day have a chance to get a non smoker rate with one company. Other companies treat pipe smokers, chewers, and cigar smokers as non smokers. Still another company gives almost all tobacco users a non smoker rate for the first 3-4 years! This same company gives a preferred rate if you use tobacco less than three to four times a year. They look at the amount of nicotine in your system.
What if an Instant Quote isn’t Right for Me because of my Special Medical History?
Using the same diligence we use to find the lowest preferred rates for our customers, we will prepare a custom quote. Of course we need to know the medical condition, its duration, treatment and prognosis.
Can I Apply at My Age?
Our agency works with individuals 18 to 85! A few companies provide policies to age 85 for term, second to die or Disclaimer insurance. Occasionally Disclaimer is available past 85.
How are Companies and Rates Selected by ASR?
A. M. Best is the industry’s most recognized insurance rating organization.
A.M. Best uses a letter grade to rate companies overall strength and solvency. Our agency uses only insurance companies that have at least an “A” rating with A. M. Best The top three ratings with A. M. Best are:
A++ Superior
A+ Superior
A Excellent
The companies rated lower than this, generally speaking, don’t have rates that are as competitive.
CAUTION ABOUT THE LOWEST RATES!
DISTINGUISH WHERE YOU FIT BEFORE YOU PRE-APPLY!
Please read this section before you apply for insurance expecting a particular rate. Almost all companies have a super preferred, preferred, and standard rate. Although the requirements for super preferred are similar for the term companies with the lowest rates, Our agency knows these differences and would like to put you with the one with the lowest rate but also the more feasible. Some companies only have 10-15% of their applicants come back with the super preferred. Others are less strict and that percentage is closer to 50%. The following are some general guidelines for super preferred: (unisex)
| Height | Weight | Height | Weight | |
| 5’1″ | 160 | 5’11” | 215 | |
| 5’2″ | 165 | 6’0″ | 220 | |
| 5’3″ | 170 | 6’1″ | 225 | |
| 5’4″ | 175 | 6’2″ | 230 | |
| 5’5″ | 180 | 6’3″ | 235 | |
| 5’6″ | 185 | 6’4″ | 240 | |
| 5’7″ | 190 | 6’5″ | 250 | |
| 5’8″ | 195 | 6’6″ | 260 | |
| 5’9″ | 200 | 6’7″ | 265 | |
| 5’10” | 210 |
Each company is slightly different, and most allow 5lbs leeway.
No tobacco usage last 2 years.
Cholesterol 180-220 (A couple of our companies will go as high as 230 to 250)
Blood Pressure 140/90 (untreated)
Family history (No deaths before age 60, siblings or parents) (sometimes one allowed) of cancer or cardiovascular disease
Aviation-No super preferred
Avocation (hazardous) -No super preferred
Driving- No more than 3 moving violations in last 2 years.
Travel- No extensive travel to underdeveloped or politically unstable countries.
If one or more of these variables are out of the guidelines, it can move you from super preferred to preferred. Even if moved to preferred these are still very competitive rates and only 5% to 10 % higher. Again, the preferred rates vary between companies so it is important to try to find which company will consider you preferred. That’s where we can help! The requirements vary between companies but here are some general preferred guidelines:
Height and weight is the same as super preferred but with more leeway sometimes up to 20-25 pounds.
Cholesterol 250 to 280
Blood pressure 150/90 (treated or untreated)
Family history cannot have both parents or one parent and one sibling die before age 60 of cancer or cardiovascular disease.
Aviation-Sometimes depending on situation
Avocation-Sometimes depending on how hazardous
Driving- Same as super preferred
Travel- Similar to super preferred but not as strict
These are general guidelines and will vary more from company to company than the requirements for super preferred.
If after seeing your quote, you would like to discuss this with our office by e-mail, phone or fax, our office will be glad to advise. Click here
Other factors that may or may not exclude someone from preferred are:
Current or history of alcohol/drug abuse
Rheumatoid arthritis
Asthma (current treatment)
Personal history of cancer or cardiovascular disease
COPD
Crohn’s disease
Current treatment for depression
Diabetes (oral diabetics can get standard rates, others can get a slightly higher premium)
Epilepsy
Kidney/liver disease
Mental illness
The best way to get started is to request a quote:
I can help you with a Life, Annuity or Financial Security product quote.
First, I need a little info about you and your needs. Let's get started.
Request a Quote