Life indemnification companies and investment companies are the two sorts of financial institutions offering annuity products. For life indemnification companies, annuities are a natural hedge for their indemnification products. Life indemnification is bought to deal with mortality risk – that is, the jeopardy of dying prematurely. Policyholders pay an annual premium to the indemnification company who will pay out a lump sum upon their death. If policyholders die prematurely, the insurer will pay out the death benefit at a net loss to the company. Actuarial science and claims experience sanctions these indemnification companies to price their policies so that on average indemnification purchasers will live long enough so that the insurer earns a profit. Annuities, on the other hand, deal with longevity jeopardy, or the jeopardy of outliving ones assets. The peril to the issuer of the annuity is that annuity holders will live outlive their initial investment. Annuity issuers may hedge longevity risk by selling annuities to customers with a higher risk of premature death.
In many cases, the mazuma value inside of perpetual life indemnification policies can be exchanged via a 1035 exchange for an annuity product without any tax implicative insinuations.
Agents or brokers selling annuities need to hold a state-issued life indemnification license, and additionally a securities license in the case of variable annuities. These agents or brokers typically earn a commission predicated on the notional value of the annuity contract.
In many cases, the mazuma value inside of perpetual life indemnification policies can be exchanged via a 1035 exchange for an annuity product without any tax implicative insinuations.
Agents or brokers selling annuities need to hold a state-issued life indemnification license, and additionally a securities license in the case of variable annuities. These agents or brokers typically earn a commission predicated on the notional value of the annuity contract.
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