Annuities are financial contracts made with an insurance company. Policy holders agree to contribute either a lump sum payment or series of payments in exchange for periodic payments to be returned immediately or at a later date. In essence, annuities are similar to a savings account. Funds are contributed, interest in accrued and annuity payouts are distributed according to terms outlined when the account is established.
One benefit of establishing annuities is they allow Annuitants to obtain tax-deferred growth of earnings. Most annuity agreements allow Annuitants to establish beneficiaries to receive future payments if the Annuitant dies before the policy expires. Annuities can also be established to pay only the Annuitant or divide funds amongst dependents.
The two most common annuities include fixed and variable. When insurance companies establish fixed annuity plans, they guarantee a fixed rate of interest and amount of periodic payments. Fixed annuity payments can be established for a specific period of time, such as ten or twenty years, or for the lifetime of the Annuitant or their spouse.
Variable annuities allow Annuitants to invest contributions into a variety of investment options. The return on investment varies on the performance of selected investments. Most people elect to invest in mutual funds because they typically provide a relatively consistent rate of return and do not fluctuate as much as other types of investing options.
Variable annuities are considered to be securities and are regulated by the U.S. Securities and Exchange Commission (SEC). Fixed annuities are not considered securities and are exempt from SEC regulations.
Unlike life insurance policies, annuities offer long-term financial protection and can protect Annuitants if they outlive their plan. Annuity contributions can be deferred to help Annuitants accumulate funds for the future.
Many options exist when developing annuity payouts. The most common include:
Flexible Deferred Fixed Annuity which allows policy holders to accumulate funds over time and provide a guaranteed minimum rate of interest. Annuitants can elect from a variety of payout options.
Deferred Annuity with Single Premium is a policy that pays current interest rates on accumulated funds. Annuitants can select new interest rate guarantees when each interest rate period expires.
Variable Deferred Annuity allows Annuitants to accumulate funds over a specified timeframe through a variety of investment options.
Single Premium Immediate Annuity policies allow Annuitants to immediately convert a lump sum payment into guaranteed payouts for life or a certain number of years.
Some annuities are used to fund tax-qualified plans such as Roth IRAs, traditional IRAs and business retirement plans.
Annuities are a great option for individuals seeking financial stability for retirement. They also provide a backup plan should Annuitants require cash for a medical emergency or if they become unemployed or injured and require funds to pay living expenses.
Most people are unaware they can sell annuity or structured settlement payments in exchange for lump sum cash. Annuities can be sold in whole or part to solve cash flow problems or obtain funds for investment opportunities.
Simon Volkov is a private investor who engages in buying annuity payments and structured settlements. Simon understands the needs of his clients and diligently works to help them through the process of selling annuities.
If you are in need of cash for annuities or structured settlements, provide information via our secure Structured Settlements form at SimonVolkov.com. Upon receipt of your information, Simon will personally contact you to discuss available options.
Published on December 04, 2009 at 02:07 AM | Comments: 1
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