The limited purpose of life insurance and annuities. Unlike some large financial companies, Smarter Bear does not universally dismiss life insurance and annuities as potentially having a role in a financial plan. It is 100% true that highly commissioned agents massively and inappropriately oversell life insurance and annuities to consumers who don't fully understand what they are buying, the costs, restrictions, and the alternatives. They often pitch annuities as a great, tax-advantaged investment vehicle - which is rarely, if ever, true.

Here are a few appropriate reasons to purchase a no-commission, low-expense life insurance policy or an annuity:

1. The maximum guaranteed lifetime income stream is needed from a fixed pool of money. Insurance companies take advantage of a pool of many buyers who will die at different ages to offer a larger income stream than an individual can obtain by investing to meet their maximum potential life expectancy.
2. A person with dependants may need protection against premature death.
3. Partners in a business may each need protection against another partner's premature death and the need to fund the payout to the deceased's estate without liquidating the company.
4. Very wealthy people may desire to shield some wealth from estate taxes upon death.

We highly recommend seeking expert advice from someone not financially involved in the transaction before purchasing an annuity or life insurance policy.