ADVERTORIAL—Although many people who own annuities never think about this, the tax consequences of dying with an annuity are punishing, so Phil Wasserman of American Tax & Annuity Advisors outlines why a lot of advisers think this alternative may be the best insurance product ever developed.
Did you know that 80% of all annuities are never used?
That means people die with them and the tax consequences are horrific to their heirs.
Unlike stocks or mutual funds which are subject to the step-up basis, the profit in an annuity is subject to ordinary income tax—both federal and state—upon death.
Most people who own annuities never think about this yet; the tax consequences of dying with an annuity are punishing.
As a result, many large companies have developed a new product that a lot of advisers think may be the best insurance product ever developed. This product is titled single premium indexed universal life insurance, but unlike regular life insurance, there’s no physical. 98% of all people are excepted and it works more like tax-free wealth transfer.
Even people with a history of cancer and heart attacks can be accepted.
The product is indexed to the stock market and can go up but cannot go down.
Unlike annuities, there are usually no caps or limits on profit.
The death benefit is tax-free like life insurance, plus the product includes—at no charge—long-term care and home healthcare, which is major, powerful benefit.
Here’s the part that most people think is too good to be true; unlike annuities that usually carry hefty surrender penalties, this strategy usually includes what’s called a return of premium, which means your money is available to you penalty-free at any time. You are reading that right.
So if you have an unused annuity, need a place to park some cash, or are interested in legacy building, check this out.
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Phil Wasserman, The Official Annuity Expert for MoneyShow and Annuity Expert & Tax-free Wealth Transfer Strategist, American Tax & Annuity Advisors