Annuities are a conservative way to secure long-term financial well-being. Annuities are insurance contracts that agree that you will pay and receive payment according to the schedule you have chosen. You can have an annuity with a payout as soon as the month after you sign or with payments beginning in 30 or so years. This depends on whether you choose an immediate or deferred annuity. Deferred annuities have the chance to grow over time.
With deferred annuities, your money can grow based on a guaranteed interest rate, the rate of the market based on a market index fund, or directly through investments.
Annuities can be a great option for people looking for long-term financial solutions for their retirement. They are an attractive investment for people close to retirement or who are more conservative with their retirement planning.
Immediate annuities begin to pay out the month following the contract signing. To get an immediate annuity, you must purchase the contract with a lump sum premium. You will then receive monthly payments for the rest of your life.
Deferred annuities will start to pay out on the date you select. Selecting a date some 20 or 30 years in the future will give your money the chance to grow. You will receive payments from this wealth of money once you reach the set date you have chosen for retirement. You purchase deferred annuities through a series of premiums.
Fixed annuities are a type of deferred annuity that grows based on a guaranteed rate of interest for a set period of time. This interest rate is backed by the issuing insurance company.
Fixed indexed annuities are a type of deferred annuity that earns interest based on the growth of a market index. This preserves your premium because your money is not directly invested in the market, and you still earn the market rate with a guaranteed minimum rate of return.
Variable annuities are a type of deferred annuity that earns interest through being directly invested in funds chosen through the annuity. There is no guaranteed rate of return.
Annuities offer people the opportunity to grow their money with interest in the same way the cash value of a whole life policy grows. These deferred funds offer the promise of future payments with potential growth that would surpass the funds if they had sat in savings.
Annuities offer principal protection. They also offer tax-deferred growth. These contracts are favored by the IRS because if the money you put into them has already been taxed, you only pay taxes on the earnings from your investment growth over time.
You should consider purchasing an annuity if you are close to retirement and want to secure a source of income. These plans will offer you guaranteed payments throughout your life. While they may not be as aggressive as other investment vehicles, that makes them perfectly suited to people who are closer to retirement.
When choosing an annuity, you have many options. For help in selecting the right annuity for your needs, contact Jones Insurance Group today. We’re here to help!