What is a Lump Sum Annuity Payment?
When you buy life insurance, you are taking care of not only your family members and other loved ones, you are also taking care of yourself. That’s because when you purchase life insurance, you’re giving yourself peace of mind, knowing that your spouse or partner and your children will get a certain amount of money to live on after you pass away. Without you and your earning power, who would pay the mortgage? Who would pay for the college tuition? Who would pay for all the other kinds of insurance that a family needs? So getting life insurance helps you quell those fears. But getting life insurance can also result in more concrete benefits to you, the policy holder, in the form of annuities.
Life insurance annuities are a form of saving. If you put your money into an annuity, month after month, year after year, you will get it back with interest, disbursed out every month. You will get your annuity payments on a monthly basis. If you want this plan, you do not have to put money into the account every month. You can choose to set up your annuity system with a lump sum annuity payment, which is a single large payment to the insurer, who then pays interest on it. When you get your annuity payments they will therefore have made a profit for you (although you will be taxed for the profit you made on interest earnings). This way you will avoid having to make monthly payments.
Conversely, a lump sum annuity payment can also mean an insurer paying the beneficiary of the life insurance policy a single lump sum, as opposed to monthly payments. Many people prefer to have all of their money at once while others like the idea of disbursed payments.
To learn more about lump sum annuity payments, life insurance rates, and other important financial topics, be sure to consult with a financial advisor. You should consider his or her advice before making any big financial decisions.