Wednesday, August 25, 2004
Recent Client question? www.legacyannuities.com
What is the difference from a Bank CD and a CD Type Annuity?
THERE ARE TWO TYPES OF CERTIFICATES OF DEPOSIT AVAILABLE1) Bank Certificates (CDs)As you well know, rates on CDs are continually changing due to various market conditions. When you purchase a standard CD with a set term such as maturity date, early withdrawal penalty, etc., your options are fixed and non-flexible. The longer term CD that pays periodic interest payments is known as a periodic CD. A CD that pays at maturity is known as an interest at maturity CD.Most people put their savings in bank CDs because it is FDIC insured. Little do they realize the cost they are paying for this coverage. One out of every three year's interest goes to taxes, plus all the other "catches" the bank attaches to your CDs. 2) Insurance company Annuity Certificates (Annuities)Annuity Certificates are only issued by insurance companies. Annuity Certificates are safe and guaranteed by their reserves, billions of assets, by the world's largest life insurance companies. With an annuity certificate you get to keep the money you would normally pay Uncle Sam in taxes and draw interest on that money until you choose to pay taxes on the interest! This gives you triple compounding of your money. Interest on the principle, interest on the tax savings and interest on the interest. This is something bank CDs can't do! Other advantages of an annuity: 1. Tax-deferral, so potentially, you can earn more.2. No "renewable" surrender charges, as in a CD.3. You can avoid probate unlike a CD.4. Free annual withdrawal provisions.5. Waiver of surrender charges at death or due to confinement in a nursing home.6. Annuity interest rates are usually higher than CDs. Why insurance companies are safe:1. 100% + reserves required by law.2. Nature of reserves is highly regulated.3. Reserves are checked through state audits.4. Insurance company promises are backed by all the assets of the company.5. Insurance company insolvencies are rare.
Most annuity certificates are purchased from captive insurance agents who offer limited fixed annuities. Most CDs are purchased from bank representatives with little investment and planning expertise. We offer a wide range of annuity certificates from a long list of the top companies in the industry. We also work to find the bank certificate that suits you and your financial needs. We also continually monitor the financial market and provide you with up to date information. We would be glad to assist you, whether you are considering an investment at this time, or if you already own an Annuity, IRA or bank CD and simply need someone to answer your questions or to see if you can upgrade your current interest rate. We are also qualified to help you look at the big picture, ensuring that any Annuity, IRA or CD you own makes sense from a taxation, planning and investment standpoint.
What is the difference from a Bank CD and a CD Type Annuity?
THERE ARE TWO TYPES OF CERTIFICATES OF DEPOSIT AVAILABLE1) Bank Certificates (CDs)As you well know, rates on CDs are continually changing due to various market conditions. When you purchase a standard CD with a set term such as maturity date, early withdrawal penalty, etc., your options are fixed and non-flexible. The longer term CD that pays periodic interest payments is known as a periodic CD. A CD that pays at maturity is known as an interest at maturity CD.Most people put their savings in bank CDs because it is FDIC insured. Little do they realize the cost they are paying for this coverage. One out of every three year's interest goes to taxes, plus all the other "catches" the bank attaches to your CDs. 2) Insurance company Annuity Certificates (Annuities)Annuity Certificates are only issued by insurance companies. Annuity Certificates are safe and guaranteed by their reserves, billions of assets, by the world's largest life insurance companies. With an annuity certificate you get to keep the money you would normally pay Uncle Sam in taxes and draw interest on that money until you choose to pay taxes on the interest! This gives you triple compounding of your money. Interest on the principle, interest on the tax savings and interest on the interest. This is something bank CDs can't do! Other advantages of an annuity: 1. Tax-deferral, so potentially, you can earn more.2. No "renewable" surrender charges, as in a CD.3. You can avoid probate unlike a CD.4. Free annual withdrawal provisions.5. Waiver of surrender charges at death or due to confinement in a nursing home.6. Annuity interest rates are usually higher than CDs. Why insurance companies are safe:1. 100% + reserves required by law.2. Nature of reserves is highly regulated.3. Reserves are checked through state audits.4. Insurance company promises are backed by all the assets of the company.5. Insurance company insolvencies are rare.
Most annuity certificates are purchased from captive insurance agents who offer limited fixed annuities. Most CDs are purchased from bank representatives with little investment and planning expertise. We offer a wide range of annuity certificates from a long list of the top companies in the industry. We also work to find the bank certificate that suits you and your financial needs. We also continually monitor the financial market and provide you with up to date information. We would be glad to assist you, whether you are considering an investment at this time, or if you already own an Annuity, IRA or bank CD and simply need someone to answer your questions or to see if you can upgrade your current interest rate. We are also qualified to help you look at the big picture, ensuring that any Annuity, IRA or CD you own makes sense from a taxation, planning and investment standpoint.
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