Understanding Annuity Types
What are the different types of annuities? There are literally hundreds of different annuity types–enough to boggle the mind of anyone at first glance. Furthermore, the companies that issue annuities are busy creating new types of annuities every day to meet the changing needs of consumers. However, when all the different types of annuities are
Understanding Annuity Expenses
What is it? For the most part, annuities will impose various administrative charges and fees. At first, the expense may seem minimal. However, over time, the cumulative effect of the charges and fees can be substantial. These expenses typically arise when dealing with variable annuities. However, fixed annuity contracts may also assess fees in the
Understanding Annuity Proceeds
What are annuity proceeds? “Amounts received as an annuity” Annuity proceeds include “amounts received as an annuity” as defined in the regulations issued under the tax code. For amounts received under an annuity contract to qualify as “amounts received as an annuity,” all of these requirements must be met: The amounts must be received on
Annuity Funding Options
What are the annuity funding options? Two funding options There are two ways you can fund an annuity: with a single premium payment or through a series of periodic premium payments. With a single premium payment, you make one lump-sum payment to the annuity issuer and then do not make any more payments. With
Funding Your Future with a Fixed Annuity
A fixed annuity is a contract between you and an annuity issuer, usually an insurance company. In its simplest form, you pay money to the annuity issuer; the issuer invests the funds and pays the principal and its earnings back to you or to your named beneficiary. What’s fixed about a
Understanding Variable Annuities
Some basics A variable annuity is a contract between you (the purchaser) and an insurance company (the issuer). In return for your premium payments, the issuer agrees to make periodic payments to you (if you elect this option), beginning either immediately or at some future date. Annuity premium payments may be
Annuities within IRAs
What is meant by annuities within IRAs? An annuity is one of the investment options available for your IRA money, as are mutual funds and certificates of deposit. Most financial planning professionals, however, recommend against holding an annuity within an IRA. Why invest your IRA in an annuity? There are two primary reasons why you
Annuitization: Single Versus Multiple Annuitants
What is annuitization? Annuitization is a payment option that turns the current value of an annuity into a stream of payments. When this option (also called the guaranteed income option) is selected, the annuity contract goes into payout mode. Example(s): Sally is 43 and is planning to retire when she turns 65. She purchases an
The Multiple Uses of Annuities
Introduction to the Uses of Annuities Annuities can be powerful financial planning tools. Most often used as an insurance product, an annuity can also be used as an investment vehicle, as a way to turn lump-sum income into a stream of payments, and as a way to make a charitable gift while providing for your
Common Annuity Riders
An annuity is a contract between you (the purchaser or owner) and the issuer (an insurance company). In its simplest form, you pay money to the annuity issuer, the issuer invests the money for you, and then the issuer pays out the principal and earnings back to you or to a