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Annuities Explained

Updated on July 18, 2014

Earn Forever with Annuities

Are you looking for a constant source of income that will last all through your life? One that will grow as the years progress? Do you seek revenue whose that you can’t outlive and is not burdened by tax? Welcome to the world of annuities. What are they? These are contracts that are sold by private insurance companies. Their money grows on a tax-deferred basis. They offer lifetime income. As such,one is entitled to a periodic income for as long as they live. Consequently, they are also a good way to be protected against inflation. They are of three types: indexed, fixed and variable annuities.

Indexed Annuities

Indexed annuities are popular. Regulated by state insurance agencies, they are sold by insurance agents. They are a good retirement-savings vehicle. In fact, they are a safe place for that money that you are intending on keeping for your retirement. Be sure to go for the best indexed annuities available in the market. You can get this from the insurance companies with the best of ratings. Why is this? This because they have experience with these markets. In addition, because one funds annuities directly from personal or investment funds, you should undertake careful scrutiny of companies in order to ascertain which is the most reliable.

Advantages of Indexed Annuities

The annuities give one a wide array of options for index crediting. You have the option of electing a declare interest rate. Moreover, these annuities are designed for higher potential rates. Additionally, all indexed annuities have a floor of zero. How s this important? Basically, it means for the very worst case scenario( such as happens when there is a downturn in the market index), you will just fail to receive interest for that specific period. This means that you do not lose any previously credited interests and premiums.

What Happens when the Purchaser Dies?

Indexed annuities cover market dips to shield the owners from any losses. What of the unfortunate event in which the annuity owner happens to pass away? What happens next?

When this occurs, the beneficiary mentioned in the contract receives the remaining policy value. In case additional guaranteed payments have remained, subsequent annuity payments are credited to the beneficiary within the same intervals that the deceased had been receiving them up to expiration of the guarantee period.

What are Variable Annuities?

The annuities are mainly insurance products in which any annuity-holder makes an expense or a number of expenses to the company offering the service of annuities. This is in the switch over for a guaranteed stream of profits for the rest of the his or her whole life or up to a pre-agreed end date of the annuity.

Returns from the variable annuities fluctuate depending on the performance of the user investments into which plan or the annuity premium is invested.
Returns from the variable annuities are frequently subject to tax deferment profit. The downside to the variable annuities is the venture risk. If the insurance investments made by utilizing the annuity premium perform badly, the annuity holder could end up seeing a extensively diminished stream of earnings from the annuity. If you select the most reliable insurance corporation, you can be able to invest small amounts in the variable annuities and reap big rewards in future.


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