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Friday, 9 February 2018

Annuity Facts | Settlements | Types | Rates

An annuity is a legally financial tool executed, moderately generally safe venture investment, which can provide tremendous value to the annuity buyer, the insured (more often, an individual) pays an life insurance company a lump-sum premium toward the start of the contract.

An annuity is a contract between you and a 3rd party (usually an insurance company) whereby in exchange for making a lump sum payment, With the retirement playing field littered with crushed investments and dreams, the safety of guaranteed income streams looks more attractive each day. Annuities can provide such guarantees, so let's take a look at what they are, how annuities work, and consider whether they make sense for you. The insurance company promises to do the followings:

  • · Provide an income for a certain period of time or for life
  • · Provide for long term care benefits
  • · Provide for accumulation, or asset growth
  • · And provide a death benefit
FIXED ANNUITIESThe key feature of fixed annuities is that the principal is FIXED. it is guaranteed by the insurance company. Gains are usually locked in each year, and you can mix and match different types of annuities to create a guaranteed income stream in retirement that is not influenced by interest rates, market fluctuations, or other typical market influences. These are good options for conservative individuals, and are not regulated as an investment but an insurance only product.
IMMEDIATE ANNUITIESNumerous people retiring today won't have the capacity to appreciate the pension income their parents were given. Today, people are in charge of dealing with their own cash and giving their own particular income to supplement their standardized savings salary. Outstanding amongst other approaches to give income to meet re-happening costs is a immediate annuity. With people living longer than at any other time, a quick annuity gives income that can't be outlasted. An immediate annuity can be made from IRA funds or individual funds relying upon where the best source of funds resides. For example, a one-time payment of $100,000 could guarantee a retiree a immediate monthly income of $1,000 until their death.

An Index annuity is a financial related product that people can use as an investment interest in their retirement portfolio. Normally, annuities are purchased from insurance companies in one lump sum payment or through a series of contributions. Sold as a contract, the money grows over a period of time regardless to how individuals purchase an annuity. The contract is annuitized at a future date that is agreed to in the contract, meaning the purchaser receives period income payments. Generally, payments are made over a set period of time or for the purchaser’s lifetime.

The hybrid annuity is not your traditional every day annuity. Hybrid Annuities are a newer evolution in the annuity product world and they are best suited to investors who are interested in preserving one’s principle whilst participating in the upside potential that can be yielded from the market.
VARIABLE ANNUITIESIt Pays To Know the variable annuity is the most complex type of annuity to understand, but with a little work, you should be able to get a basic grasp of how they operate. With these types of annuities, the principal value "varies" based on the performance of the sub-account values that your money is allocated to. These are viewed as investments and are sold by individuals that are licensed to sell both investments and annuities. These are good for individuals that want upside appreciation, and can tolerate risk in their portfolio. This type of investment typically has higher fees and expenses because of the additional insurance costs that are prevalent because of the insurance component.
DO I NEED AN ANNUITY?Look at all of the available annuity options that can solve for those needs
Look at annuity alternatives that do the same thing
Determine how much money is required to solve the problem
Compare fees, costs, expenses, taxes, performance, what-if scenarios
Allocate resources accordingly

What kind of Annuity is Right for Me?Define what problem you want your money to do for you (Income, growth, legacy, or long term care benefit).
· Have I made maximum contributions to other retirement plans?
· Will I need my money sooner than 59 ½ years old?
· Am I using a highly rated insurance company to buy my annuity?
· What is the cost? Are there any fees?
· Who do I want to leave my assets to?

HOW CAN YOU SELECT THE RIGHT ANNUITIES?You need to work with a professional. Someone who knows what you need, and can match you up with the right solution. In my firm, we like to look at prices and solutions from all available annuity providers, not just 2-3, and try to create the greatest benefit for you using the least amount of money.
Annuity owners pay an insurance company regular premium payments or a one-time lump sum in exchange for steady income payments that can last for the rest of their life or a fixed amount of years. For example, a $100,000 annuity can provide an annuitant with about $630 monthly, or about $7,600
yearly. Unlike a 401(k) or IRA, there is no limit to the amount you may put into an annuity.

How to withdraw Money from an Annuity

Annuities are popular financial assets because they ensure a person’s funds are protected. This high level of security is a relief to most, but it can also be a problem if an annuity owner’s financial circumstances change and they need access to the funds in the annuity.

These two processes, gives you the idea on how to get money from an annuity against the terms of the contract: via withdrawals or from selling the right to future payments.