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What is an Annuity?

An Annuity is a legal contract between you and an insurance company. You make a single premium payment or periodic payments over a period of time.

The insurance company promises to return your principal plus specified contracted yields paid in a lump sum, or over a specified period of time, or guarantee a lifetime income to you that you can never outlive.

Two types of annuities are available: Immediate and Deferred.

An Immediate Annuity derives its name because it starts payments immediately, or within one year after purchase. Immediate Annuity payments are guaranteed for a fixed period, for example, 10- or 20-years. Or, you can choose to take a lifetime income that you can not outlive. Insurance companies also offer period certain payments that are guaranteed. In other words, if you were to die prematurely, payments would be paid to your beneficiary for the balance of the period chosen. For instance, if you set up an immediate annuity with a 10-year certain period, and were to die a year later, then your beneficiary would continue to receive payments for the balance of ten years, or for nine more years.

If you are married, you can also take a joint period certain that is based on the lives of both you and your spouse.

Check out -- Immediate Annuities

A Deferred Annuity, unlike an Immediate Annuity, starts making payments to you at a certain period in the future. Deferred Annuities are designed for accumulation and are tax deferred during the accumulation period, until you start receiving payments.

There two types of deferred annuities: Fixed and Equity Indexed Annuities.

Should You Buy an Annuity?

This depends on your individual needs now and at some point in the future.

As a CD holder, if you continually roll over your CDs, you are subject to current income taxes. Plus, CDs are subject to the expensive and time-consuming probate process.

CDs vs. Annuities

With an annuity, you can take advantage of deferred growth. And like a CD, with a fixed CD-Type Annuity, you an choose annuity deferral periods. Also, some annuities allow you to take a portion of your annuity as income during the deferral period. But unlike CDs, an annuity can avoid probate taxes.

Power of the Deferred Annuity

If you have a pension/401(k) plan, an annuity can offer a safe place to harbor your money, where it continues to grow tax-deferred. Or, if you are ready for retirement, you may want to choose guaranteed income that you can not outlive.

Maybe you have an inheritance you want to invest, or money from the sale of a home or business. You might consider a Bonus Annuity that could immediately increase your balance as much as 10%.

Perhaps you want to start accumulating money for retirement. A Flexible Premium Deferred Annuity allows deposits of as little as $25 per month.

So whether you have millions to invest or as little as $25 per month, there is an annuity option designed to fit your needs.

Which Annuity is Right for You?

If you are near retirement and/or wish to turn your 401(k), IRA, or sale of a home into a secure, guaranteed income stream, an Immediate Annuity might be right for you.

On the other hand, if you are still saving for retirement and want to grow your money with the power of tax-deferred compound interest, consider the Deferred Annuities.

If you are a CD buyer, consider a CD-Type Annuity. Annuities not only provide a higher return than CDs, but the interest earned grows tax-deferred and most CD-Type Annuities have a surrender-free withdrawal provision, so unlike a CD, you can withdraw money without any interest penalties. With CD rates at an all time low, and dropping, annuities offer a strong and safe alternative.

By combining different annuity strategies, you can create customized solutions that meet your individual needs.

Let us help by providing you with a no-obligation personalized annuity quote based on your needs.

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