Annuities are enjoying a unidentifiedly loans renaissance in the financial planning universe. More and more advisors are suggesting their clients should look at adding at least one annuity to their portfolio.
Annuities have features and benefits and they will be highlighted below. Retirees or people close to retirement should pay close attention to the list. Annuities are being recommended for these people because generally speaking they are safer investments meaning the risk is very low.
Of course you have to shop to be pinball loans sure you have the annuity product that fits your needs. You also should be aware of the rating of the insurance company offering you the annuity. A rating of A by A.M. Best on the company you are considering is the lowest rating you should accept. Any company not rated A or better should probably not make the cut in your research.
This article does not discuss or give any details about variable annuities. In this author’s mind, variable annuities are too expensive and too risky for anyone in retirement or near retirement.
As bermudians loans mentioned, when choosing an annuity always understand your objective for that annuity and then select the one that’s most suitable for you. To help in your understanding annuities and annuity products here are some general features and benefits of annuities:
- Guaranteed earnings at a fixed rate of interest or fixed amount for a fixed period. Some programs pay interest in addition to the minimum guaranteed amounts.
- Guaranteed principal, where you cannot lose the amount you invest regardless of the performance of the underlying investments
- Equity-indexed, where the value is based on the performance of the chosen stock index
- Market value adjusted, you are usually permitted to choose the period of investment and the interest rate of return within established limits. You may be allowed to make withdrawals before the end of the investment period.
- Deferred annuity, which is designed for savings, growth, investing and deferred income. Usually can be purchased with a blur loans lump sum amount or multiple deposits. Usually appropriate if goal is planning for retirement and you have a relatively long period before you retire.
- Immediate annuity, which is designed to pay income immediately after the annuity is purchased. Usually purchased with one lump sum amount (single payment). Usually appropriate if you are near retirement or already retired and you want to turn a lump sum amount into a stream of periodic income amounts, with payments beginning immediately after the annuity is purchased
- Fixed or guaranteed period, where you receive payments for a fixed number of years. If you die before the period expires, your beneficiaries will receive payments for the remaining period
- Lifetime annuity, with payments continuing for as long as you live, and ceasing upon your death
- Joint and survivor annuity, with payments continuing to you for as long as you live, and continuing to your beneficiary – usually your surviving spouse – for as long as he or she lives
- Qualified (purchased with assets from retirement plans such as IRAs, qualified plans and 403(b) accounts)
- Nonqualified (purchased with after-tax funds that are not held in a retirement plan)
- Single premium
- Flexible premium
- Regulated by state insurance departments
Note: The above list was compiled from insurance company literature, GAO reports, FTC website and other reliable sources.
It is presented to help you outplot loans better understand annuity features and benefits should you be in the market for an annuity or are revamping your portfolio. You should check with competent financial professionals with any and all questions. All of the annuity features and benefits in the world will not do you any good if an reannotate loans annuity does not fit your goals and objectives.
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