Annuity Products That Benefit You
Annuities are insurance contracts that make regular payments to you, either immediately or at some point in the future. An annuity plan can be customized to help fit your specific needs and may offer tax advantages.
Many annuity contracts are highly customizable and can offer a wide variety of features. Be sure to discuss all your options with your financial advisor or insurance agent before purchasing an annuity product.
Types of Annuities
When it comes to annuities, there are two main types: Immediate and Deferred. An immediate annuity is designed specifically to provide an immediate, guaranteed lifetime payout.
With this type of annuity, you give up all liquidity and you cannot access the money in your account for emergencies or any other reason for a specific period of time.
However, you do know exactly how much you will be receiving in the future, so it can provide peace of mind. Fees are woven into the payout, so make sure you understand what they are before signing up for an immediate annuity.
A deferred annuity makes contributions to the contract, and then you receive payments at a later date. These payments can be monthly, quarterly, or annually. The advantage of a deferred annuity is that your principal may grow before you start receiving payments. This growth is tax-deferred, meaning you don't have to pay taxes on the gains until you start receiving payments.
If you want to contribute to your retirement income on a tax-deferred basis, deferred annuities may be a good option. Unlike Roth IRAs or 401 k's, there are no contribution limits for deferred annuities.
When it comes time to start taking distributions from your account, you will have two options: fixed or variable payout rates. With a fixed payout rate, you'll receive the same amount of money each month, regardless of how the underlying investments perform. A variable payout rate gives you the potential for higher payments if the investments do well; but if they perform poorly, your monthly payment could decrease as well.
Fixed Indexed Annuities
Fixed Indexed Annuities are a type of insurance product that guarantees a fixed interest rate on your investment. Additionally, once the contract is over, you can either annuitize or transfer it to a retirement plan. Fixed indexed annuities are better used for growing income in the accumulation phase rather than generating income in retirement.
A variable annuity is a type of tax-deferred annuity. This means that the money you contribute to the annuity is not taxed until you withdraw it, and in many cases, the earnings on your investment will grow tax-free.
An annuity contract can guarantee lifetime income. In other words, if you die before all of your money has been paid out, your beneficiaries will receive a death benefit equal to the remaining value of your contract. Some contracts also offer an income rider for beneficiaries, which pays them a set percentage of the original account value for life (or for a certain number of years).
Variable annuities can be a great addition to your retirement income plan. If you have maxed out your Roth IRA or 401(k), you may want to consider adding a variable annuity to help boost your savings.
A hybrid annuity is a retirement income investment that offers the security of a fixed rate of return combined with the potential for higher returns through exposure to riskier assets.
Investors can divide their savings between conservative assets, which offer a guaranteed rate of return, and riskier ones, such as stocks and mutual funds, which carry the potential for higher returns but also involve more risk.
Indexed Annuities: How do they work?
Indexed annuities are a type of fixed annuity that offers investors the potential for higher yields when the stock market performs well.
The indexed annuity usually tracks an index, such as the S&P 500 or Dow Jones Industrial Average, and provides protection against market declines. Indexed annuities are calculated based on year-over-year gain in the index or its average monthly gain over a 12-month period.
Indexed Annuities: Protection
Indexed annuities offer interest crediting based in part on the performance of an underlying market index. This helps to protect your investment, as it limits the risk to which you are exposed.
Additionally, a guaranteed minimum return ensures that your indexed annuity's value won't fall below the amount specified in contract. In this way, you can be sure that you'll receive some benefit, even if the market takes a downturn.
Indexed Annuities: Risks
Indexed annuities are not as safe as fixed annuities, but they are safer than variable annuities. Indexed annuities have surrender charges and early withdrawal penalties.
Fixed Annuities: What are the benefits
A fixed annuity offers a number of benefits, including:
· Guaranteed payments for the life of the contract.
· Tax deferred growth, which can help your retirement savings grow more quickly.
· The principal is guaranteed never to decline in value.
There is no market risk associated with a fixed annuity and you will receive the same monthly payment amount regardless of what happens in the stock market.
How do I purchase a fixed annuity?
There are a few ways to purchase a fixed annuity. You could buy an annuity through a qualified financial advisor, insurance company or broker.
You also might want to consider involving your financial planner before buying annuities, as they can help you find the best product for your needs and ensure that you're getting the best possible rate.
Variable Annuity Benefits
A Variable annuity could also be an investment option to consider. They typically offer a higher return than other types of investments, and the money is tax deferred until funds are withdrawn.
There is no limit to the amount that can be put into a variable annuity, and investors have a wide range of investment choices to choose from.
Annuities for Retirement
When you retire, it is important to have a steady income stream. That's where annuities can help with your retirement income plan! There are many different types of annuities available on the market today, so it is important to do your research and find the right one for you.
Make sure to consult with a financial planner or insurance agent to get help finding the best product for your needs.
When you receive an annuity payout, you have a few options to choose from. You can choose a lifetime income stream, or you may consider to elect to take a lump sum payment.
There is also options for you to decide how long you want the payouts to last. You might want them to continue until either you or your beneficiary die, or maybe just for a set number of years. It's up to you! Payments will continue until the chosen period is over, at which point they'll stop automatically.
Life Insurance vs Annuity
When it comes to long-term financial planning, there are two important options to consider: life insurance and annuities. Both have their own unique benefits that can be extremely valuable for your future.
Life insurance is a policy that provides economic protection in the event of your death. It can help ensure that your loved ones are taken care of financially after you're gone, and is a vital part of any comprehensive financial plan.
Annuities, on the other hand, are contracts that pay out a fixed sum of money each month or year. This income can be helpful in guarding against outliving your assets, and could be a wise choice for anyone looking to secure their retirement future.
Both life insurance and annuities are important tools for long-term financial security. Make sure to discuss your needs with an advisor to find the right product for you!
If you are considering purchasing an annuity as part of your financial plan, you can always give us a call for a complimentary financial session.
We can learn more about your unique situation and advise you on all your possible options according to your lifestyle today, tomorrow and years to come.