What Is an Annuity?
An annuity is an investment that pays you a set monthly income for a set period of time. You can even get guaranteed income for life.
The annuity in its simplest form is a contract between you and the issuing insurance company under which you make a lump-sum payment or a series of premiums over a specific period of time.
In return, the insurer agrees to make periodic payments to you beginning immediately or at some future date. Annuities typically offer tax-deferred growth of earnings and may include a death benefit that will pay your beneficiary a guaranteed minimum amount.
Annuities can be a useful place to invest some money IF you’ve exhausted all other tax-deferred retirement plan options, BUT you really need to do your homework.
In many cases, it may be better to buy a mutual fund outright in a taxable account. There are numerous insurance companies out there feeding off of the uneducated investor by collecting surrender charges, loads, and other bogus charges.
Don’t let yourself be one of those victims. However, if you have your heart set on annuity investing, shop around and find the right product at the right price – and keep more of your funds where they belong: in your own wallet.
How do annuities work?
An annuity works like life insurance in reverse. With life insurance, you pay a certain amount each month over many years so your loved ones will get a lump sum when you die. With an annuity, you pay a lump sum up front, and get income back each month over many years.
The size of your monthly payment will be higher if you buy when interest rates are high. For most people, it’s better not to put all your money into annuities when interest rates are low. The type of annuity also affects your monthly income.
What type of annuities are available?
The risks of an annuity what you should know!
An annuity can have an impact that reaches far into your financial future !!!
You have to think ahead because, in most cases, you can’t reverse your decision. A financial expert can help you find the best strategy for your own situation. Please do NOT ask for advice from an annuity salesperson as he/she will explain why you need an annuity as they NEED the commission of the sale.
Now let’s see some examples, and the different options you have as annuity alternatives to Protect Your Capital or check out Is the Bank Stealing Your Inheritance???
Related posts:
- What Types of Annuities are Available?
- Annuity Risks and What You Should Know!
- Is the Bank Stealing Your Inheritance???
- Protect Your Capital!
Comments