DEFINITION OF 'ANNUITY' / education funding assistance & more


A financial product sold by financial institutions that is designed to accept and grow funds from an individual and then, upon annuitization, pay out a stream of payments to the individual at a later point in time. Annuities are primarily used as a means of securing a steady cash flow for an individual during their retirement years.

Annuities can be structured according to a wide array of details and factors, such as the duration of time that payments from the annuity can be guaranteed to continue. Annuities can be created so that, upon annuitization, payments will continue so long as either the annuitant or their spouse is alive. Alternatively, annuities can be structured to pay out funds for a fixed amount of time, such as 20 years, regardless of how long the annuitant lives.

Annuities can be structured to provide fixed periodic payments to the annuitant or variable payments. The intent of variable annuities is to allow the annuitant to receive greater payments if investments of the annuity fund do well and smaller payments if its investments do poorly. This provides for a less stable cash flow than a fixed annuity, but allows the annuitant to reap the benefits of strong returns from their fund's investments.

The different ways in which annuities can be structured provide individuals seeking annuities the flexibility to construct an annuity contract that will best meet their needs.


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RC 529 vs IRC 7702 — Saving for College

First of all, what is a 529? (It is the Tax code gov­ern­ing col­lege sav­ings plans) The 529 col­lege sav­ings plan is a state spon­sored, tax-advantaged tool that is offered so fam­i­lies can save specif­i­cally for qual­i­fied higher edu­ca­tion expenses for their chil­dren. Per­son­ally, I do not like to call them ‘sav­ings’ plans due to the fact that they are invest­ments that come with ‘risk of loss’. To me, a ‘sav­ings plan’ means the money is in a safe posi­tion with a guar­an­tee of ‘no loss’.

What is a 7702? (It is the tax code gov­ern­ing cash value in life insur­ance poli­cies). The 7702 col­lege sav­ings plan is not a state spon­sored plan. It is how­ever the Inter­nal Rev­enue Code that describes the tax advan­tages asso­ci­ated with the cash value in life insur­ance products.

We show you a way of uti­liz­ing these cash val­ues to fund any expenses includ­ing but not lim­ited to edu­ca­tion expenses, but with much more flex­i­bil­ity of use, while also offer­ing tax advantages.

I must point out now that an IRC 529 is an invest­ment vehi­cle specif­i­cally for sav­ing for qual­i­fied higher edu­ca­tion expenses. On the other hand, the IRC 7702 is the code that relates to the cash value in life insur­ance poli­cies. So it is not gen­er­ally con­sid­ered a sav­ings vehi­cle by the gen­eral pub­lic. It is a life insur­ance policy.

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