Annuity

 What Are Annuities?  What To Look For In An Annuity?

Firstly let me shout out a big welcome to you. I started this site because, like a lot of people, I am approaching retirement and have parents that are retired and, because of my business background, they have been asking about retirement income options and Annuities frequently mentioned for a safe retirement income option.

I have developed this site as a result of my research for myself and them.  I have taken the approach to provide basic, unbiased information for anyone that is interested in Annuities and if they can benefit from them.

As a result of my mission I decided to make this Annuity website to present various products that may be helpful.  In this site I intend to educate others on what they can expect to see in terms of various Annuity products and the benefits to look.  Also what you can do to get it and avoid being scammed …oh yes they are out there!

Since you’ve reached this Annuity home page of my site, you’ll be able to find out exactly what you need to know from the areas below:

Testimonials/Reviews:
Reviews or testimonials of products are important in making an assessment of an Annuity product.  An Annuity review,  provided by certain companies, may be very biased to their own products.  So be cautious about what you read and what they are promoting. If you take a close look, you can see which Annuity they are really promoting.  It may be best to find Annuity reviews from independent reviewers before making a decision.

Key Points:
There are hundreds of Annuity companies.  Some of these organizations are worldwide.  Some are good and some are not.

Remember, Annuities come from insurance companies and the company is there to make money.  They are going to be as "one sided" as the market will allow.  Also, an Annuity is similar to a CD from a bank (but usually better from a return to you).  You "loan" the company money and they pay you interest on that money.  Similar to you borrowing money from a bank to buy a house or car.

While there have been big changes since Annuities started to be promoted several years ago, an Annuity is typically restrictive to you (like a CD) but pays a better interest rate.  However, they are notorious for paying a very high commission to the agent selling them.  As a result you should be careful as to the reasons an Annuity is being promoted to you, i.e. for your benefit or the agents?

Annuity

What is an Annuity?
An Annuity is an insurance company product that is designed to take and grow financial resources (i.e. your money) and then, upon annuitization, pay out a circulation of repayments to the person at a later time. Annuities are mainly used as a means of obtaining a stable income for someone during their pension/retirement years.

BE AWARE that sometimes a company or agent may give you an interest rate that sounds good, e.g. 7-8 percent return, but that may be for only the first year or two and then it could go down substantially (1-2%).  Be sure to get the interest rate for the duration of the annuity and the payout.

Annuities can be arranged according to a range of factors, such as the period and repayments from the premium. Annuities can be designed that repayments will provide either the annuitant or their partner income for life. On the other hand, annuities can be arranged to pay out resources for a specific period, such as 20 years, regardless of how long you live.

Annuities can be arranged to offer specific regular repayments or diverse payments. The purpose of variable annuities is to allow you to get greater repayments if investment strategies of the account do well and lesser repayments if its investment strategies do badly. This provides for a less constant income than a fixed annuity, but allows you to experience the  benefits of dividends from the companies fund's investment strategies.

There are many ways in which annuities can be designed and offer you the flexibility to make an annuity that will best meet your needs.

Annuities are typically not "insured" or "guaranteed" like your bank deposits with FDIC.  However, individual states do regulate the insurance industry and require them to have substantial financial reserves for your safety.

Annuity Types

There are many different types of annuities, e.g Fixed Annuity, Variable Annuity, Immediate Annuity, Indexed, Longevity etc so get a good explanation of what you are considering is important.  However, there are two basic types: Deferred and Immediate.  The payouts of these should be obvious.  Within these basic types you can have a Fixed or Variable annuity.

Annuities vs Bank CDs

An Annuity and CDs  are similar in that they are safe, secure investment strategies with confirmed amount of dividends based on charges, both from large loan companies, CDs from banks, Annuities offered by insurance providers, but they both possess built in variations as well.

The big variations is that an Annuity provides everything CDs provide, they carry several advantages.

• Greater Returns
• Tax-Deferral
• Liquidity

CDs do have FDIC protection to protect against default, but Annuities also have safety precautions to ensure Insurance organizations have adequate reserves. Insurance organizations may also be examined for strength by indepent firms, e.g. Standard & Poor's, Moody's, A.M. Best or Duff & Phelps . The more positive the report usually means a stronger company.

Higher Returns For Annuities:
Annuities, like CDs, are tied to interest rates. But when rates are low so are CD rates whereas annuities typically have a guaranteed rate, around 3% or 4%. You money will never dip below the minimum amount during times of low interest rates.

Tax-Deferral For Annuities:
You pay yearly taxation on CD gains without being able to take remove your money until your commitment phrase is over. With annuities, there is also a set time period, but the income can be are tax-deferred. You only pay taxes on interest gained when you remove your money. So with annuities the postponed tax continues to be earning you more and more cash, instead of being paid out and taxed.

Liquidity Of An Annuity:
CDs do not allow you to take any money out during the CD time period. Annuities have conditions that allow you to remove cash, usually 10% of your account value every year plus interest monthly. Several other contract conditions allow you access to all of your resources such as in the event you are put in the hospital, going through a life-threatening sickness, put through a lasting or extended stay in a elderly care, or other major mishaps that affect you. In addition, an Annuity can be arranged to pay-out for the lifetime of the owner over a period such as five or ten years, thereby distributing your tax-burden and providing improved income security.

If you did not find what you were looking for, you can search further below:

Annuity -What Does It Cost You?

Income Annuity, What Is It?