Life & Retirement

Life insurance protects against financial loss due to the death of the insured. Annuities provide the security of a lifetime income. These financial products are tailored to meet the needs of people at different stages of their lives. We explain what each product in this list protects against and illustrates how it works.

Protecting Your Life

If you are in retirement or plan to be in five or ten years, you'll soon be hearing from financial advisers about products to protect what you have earned and to create retirement income. These products and objectives may seem very different from those you had during your working years — and may still have. You may believe your prospects for a decent retirement are good, but like most Americans, you worry that medical costs, a poor economy or a stormy investment climate could derail your plans.

The insurance industry has known for years of the challenges facing baby boomers, and the industry is responding with many new products. The key to evaluating these products is understanding that insurance companies pool risks so their customers do not suffer financially from possible misfortune. For this service, insurers impose some trade-offs: they charge fees and may design products that limit what you can earn on them.

Most boomers probably know how life insurance protects beneficiaries and aids in financial planning. They may not know how annuities can protect against bear markets and can be turned into personal pension plans. Annuities can help steady your financial ship when staying afloat is more valuable than sailing the fastest.

This section also covers three items that aren't insurance but are part of the insurance and financial-planning world. Life settlements and viatical settlements are contracts in which a third party buys your life insurance contract for less than its face amount, but more than its cash-surrender value. They can be valuable to people who no longer need their life insurance or no longer can afford the premiums, but it's important to deal with reputable buyers.