The first documented life insurance policy was established in 100 B.C. as a burial policy. Although the marketplace has transformed, the main purpose of a tax-free death benefit hasn’t. Life insurance is one of the most misrepresented financial products due to commissions paid on these types of policies.
Types of Annuities
There are several annuities to choose from including:
- Immediate annuities;
- Fixed annuities;
- Indexed annuities; and
- Variable annuities.
Life Insurance Byproducts
There are others including buffered and fee-only—- mentioned above are not all the types available in the marketplace. For example, with term life, there is another option of receiving a money-back guarantee by purchasing a Return Of Premium (ROP) policy. However, the price can be at least two to three times the cost of a no-money-back guarantee term life policy.
Similarly, since the creation of the first universal life insurance policy in 1979 by E.F. Hutton (referred to as “Total Life”), there have been many variations including Indexed Universal Life (IUL) and Guaranteed Universal Life (GUL). Universal life subsequently led to the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), Deficit Reduction Act of 1984 (DEFRA), and Technical and Miscellaneous Revenue Act of 1988 (TAMRA).
With so many life insurance policies to choose from, it’s important to know the differences between each, the time commitment, and tax advantages (or disadvantages).
