Deferred Annuities
Single premium deferred annuities require a lump sum premium to start the contract, and all funds grow tax deferred based upon the selected crediting method. Flexible premium deferred annuities also grow in the same manner, but allow the policyholder to pay into the annuity with multiple installments over time. Deferred annuities can accumulate and then be turned into an income stream as well.
Equity Indexed Annuitys
An annuity whose returns are based upon the performance of an equity market index, such as the S&P 500, DJIA, or Nasdaq. The principal investment is protected from losses in the equity market, while gains add to the annuity’s returns. Interest credited to the annuity does not directly track changes in the index, but instead reflects those changes as affected by the selected indexing formula.
Fixed Annuity
A contract with the insurance company and the purchaser (or annuitant). Earnings accumulate tax-deferred at the rate specified within the contract. There are two main ways in which earnings accumulate: based upon a declared interest rate, or indexed with market growth; neither having a potential for loss in principal.
HMO (Health Maintenance Organization
Public or private organization providing comprehensive medical care to subscribers on the basis of a prepaid contract. An HMO entitles members to services of participating physicians, hospitals, and clinics. Emphasis is on preventive medicine.
Key Points:
- Restriction to network doctors and hospitals (except for emergencies)
- Referrals required to see a specialist
HSA (Health Savings Account)
An account created for individuals who are covered under high-deductible health plans (HDHPs) to save for medical expenses that HDHPs do not cover. Contributions are made into the account by the individual or the individual’s employer and are limited to a maximum amount each year. The contributions are invested over time and can be used to pay for qualified medical expenses, which include most medical care such as dental, vision and over-the-counter drugs.
Key Points:
- One Family Deductible
- Tax deductible contributions to savings account pay tax-free toward deductibles, co-pays, prescriptions, eyeglasses, and other medical services
Medicare Advantage
An account created for individuals who are covered under high-deductible health plans (HDHPs) to save for medical expenses that HDHPs do not cover. Contributions are made into the account by the individual or the individual’s employer and are limited to a maximum amount each year. The contributions are invested over time and can be used to pay for qualified medical expenses, which include most medical care such as dental, vision and over-the-counter drugs.
- Run by private insurance companies approved by Medicare
- Provides your Part A and Part B coverage, but can charge different amounts for certain services
- May offer extra coverage and prescription drug (Part D) coverage for an extra cost
- Costs and services vary by plan
- Offered as HMO, PPO, and PFFS plans
- Doctors can choose whether or not to accept the plan
Medicare Supplements
An account created for individuals who are covered under high-deductible health plans (HDHPs) to save for medical expenses that HDHPs do not cover. Contributions are made into the account by the individual or the individual’s employer and are limited to a maximum amount each year. The contributions are invested over time and can be used to pay for qualified medical expenses, which include most medical care such as dental, vision and over-the-counter drugs.
- Health insurance sold by private insurance companies to fill the gaps in “Original Medicare” parts A & B
- Plan coverages are standardized by the government to offer the same basic benefits across insurance companies. A Medicare Supplement plan letter indicates exactly what is covered.
- Do not include a prescription drug plan
- Go to any doctor that accepts Medicare patients
PPO (Preferred Provider Organization)
Hospital, physician, or other provider of health care that an insurer recommends to insureds. A PPO allows insurance companies to negotiate directly with hospitals and physicians for health services at a lower price than would normally be charged.
Key Points:
- In and out of network benefits available
- No referrals required
Short Term Medical
Usually offered as PPO’s, these short term medical plans are designed to get catastrophic coverage in place quickly. These plans are usually available for up to 12 months, require limited underwriting, and can be in force as early as the next day. Most provide coverage for inpatient/outpatient care and prescriptions, but almost everything is subject to the deductible.
Key Points:
- Next day coverage
- Available for up to 12 months
- Geared toward catastrophic medical needs
Single Premium Immediate Annuities (SPIA)
Annuities that require a lump sum premium in exchange for a guaranteed series of payouts over an extended period of time. These payouts are made to the annuitant (which is frequently the policyholder). The most commonly sought after guarantee that this type of annuity offers is an income stream that cannot be outlived.
Multi-Year Guarantee Annuity
Your initial investment is credited with a percentage specified in your contract at the time it is purchased. The contract will state how long the rate is guaranteed and at what point it can change.
Term Life
Traditionally the least expensive way to cover temporary life insurance needs. This type of policy does not grow cash value and is geared towards providing a larger death benefit for a specified term. Premiums are guaranteed for the specified term (i.e. 20 yrs). At that point the policy will usually expire unless it is converted to a whole or universal life policy.
Universal Life
The most flexible form of traditional life insurance. It is also a cash value policy, but depending on how the policy is structured it can be used for either temporary or permanent needs. It can be used to accumulate internal cash value more rapidly than whole life, create a tax-free income stream, or simply provide a guaranteed death benefit. Due to its flexibility, it is best to consult an insurance professional to ensure that your personal goals will be met.
Variable Annuity
A contract with the insurance company and the purchaser (or annuitant). Earnings accumulate tax-deferred and are based on the performance of the sub-accounts selected by the owner. The sub-accounts are professionally managed (often by mutual fund money managers), and the owner can select from a wide variety of investments such as stocks and bonds, both U.S. and international.
Whole Life
The most expensive type of permanent policy. It is a cash value policy that provides a death benefit but grows “internal equity” as well. All premiums, internal growth, and death benefits are fixed and guaranteed.