Lake and Sumter Style Magazine
07:54 pm
25 April 2019

The Villages Insurance

The expert team at The Villages Insurance, including retirement specialists Diana Johnson, Tangee Zutlas, and Les Roth, and team administrator Lisa Reilly, has all the answers to your insurance questions.


What is the difference between whole life, term life and universal life?

Diana: The uses of these different types of policies vary. Term life is a specified term of 10, 20, or 30 years and is inexpensive to purchase. It pays the benefit in the event of death within that specified term. When you’re younger and have a family that you need to protect, term insurance tends to be the solution for you. You can buy a large amount of insurance for a small amount of money, as your responsibilities may lessen over time. While the kids are young and your mortgage balance is higher, this would be an appropriate use of a term policy.

Whole life is a long-term goal. It lasts a person’s whole life and offers consistent premiums with guaranteed cash value accumulation. You may want to use the cash value for things like starting a business, buying a house, or even an income stream in retirement. Universal life bridges the gap between the two of them. Universal life offers flexibility in premium payments and death benefits, and is considered permanent life insurance, just like whole life. Universal life has potential for higher growth based on an individual policy’s interest and crediting factors, and universal life policies are generally lower in premiums.


With CD rates so low, I’m looking for more return but I’m afraid of the market. Is there a safe way to get better returns?

Tangee: What works for most is using a fixed annuity as a CD replacement. It’s a very safe insurance product and provides a better return than a CD. Insurance companies have an added source of funding for fixed annuities called mortality credits, this allows the annuity companies to pay higher rates to policy holders than banks are permitted for CDs. In addition, fixed annuity earnings accumulate tax-deferred, adding to its return and potential. As an additional benefit, annuities purchased in Florida (or Texas) are creditor protected, so if you’re sued, the money in an annuity has legal protection.

If you’re looking for still higher yields, and have a holding time of 7 years or more, you should look at Fixed Indexed Annuities. These products provide near equity level returns with no risk to your principle. These annuities work by tracking an index; if the index advances interest is credited to your balance, if the index retreats nothing happens to your balance. You get the ups but not the downs. There are also a lot of other benefits to these products like individual or joint guaranteed lifetime payouts, and the potential for Cost of Living type increases in those distributions.


I’m retiring with a 401(k) and want to diversify. Is there a safe way to grow my money without having to pay taxes?

Les: When you leave a company, you don’t want to keep all of your eggs in one basket. If you’re getting a pension from a company and you have a 401(k), diversification is an important thing to consider. Should something happen to the company, whether they have financial issues or get hacked, you don’t want everything in one place. 401ks are only available under a company plan, so you’ll be doing a tax-free transfer to an individual IRA. While in your 401(k), you’ve probably been investing in the stock market through mutual funds. Those accounts have the opportunity to go up but they also share the risk of going down. Now that you’re retired and presumably want to spend down and enjoy your savings, you should be diversifying some of your money into a safe, income producing product that guarantees lifetime income. Fixed Indexed Annuities are an excellent choice and retain the same tax deferred status as your 401k. Fixed Indexed Annuities also give you the opportunity to participate in market growth while protecting you from market downturns for example, if the market goes down 15 points in a given year, you won’t see any of that loss to your principal. Other benefits over leaving your money in a 401k include: flexible withdrawal options, guarantees that you cannot exhaust your money when the lifetime income option is chosen, and the potential for other benefits such as increased payouts should you enter a nursing home; none of which are afforded by 401ks.


For More Information

The Villages Insurance

Seven locations in The Villages®