Life Insurance Annuities
Refered to Back-to-Back Annuities
The annuity pays for the life insurance premium
Life insurance annuities are often referred to as back-to-back life annuities, where part of the revenue from the life annuity pays the life insurance premium.
There are many variations of these arrangements but they are mostly referred to as life insurance annuities. For example, the life insurance policy could be owned by the owner of the life annuity, either alone or with his child or children. or the children could own the policy outright but get help from the life annuity owner to pay for the life insurance premium.
Whatever the arrangement, the whole idea is to preserve for the future generations, the amount of capital used to purchase the life annuity.
What is not given a lot of thought is that good health in a parent is a godsend for those who realize it can have a very beneficial effect on future generations.
Life insurance annuities have their place in financial planning
A life insurance policy owned by a child or children is of the greatest benefit as the premiums paid are minimal and the return is not taxable. So even if there is not a lot of money available from a life annuity to pay life insurance premiums, a life insurance policy can be taken out alone on a parent or relative in good health. This in itself creates goodwill in the family as a legacy is now certain and later on, the life insurance policy creates wealth.
Life insurance annuities have their place in financial planning as they maximize the return on your savings.