The Ins And Outs Of Variable and Fixed Annuities
An individual buys an annuity from an insurance company and pays a lump sum or a series of payments over time. In return, the insurance company guarantees that the funds will grow at a tax-free rate. The earnings rate may be guaranteed for a period of time in a fixed account annuity.
The account value in a variable annuity will change depending on how well the portfolio performs. The annuity can only be invested in specific investment types and can change between fixed investments to common stock arrangements.
If the individual elected the life annuity option, then the payments from the annuity may continue for the duration of their life.
There are a number of different options that determine the eventual size of the payments each period. The account value, distribution length, number of beneficiaries, and interest rate all determine the size of the payment.
There are various policy options that may allow you to extend the life on the contact beyond the life of the account holder. With the right options, your children or spouse may be able to continue your options for the rest of your life.
Investors should consider the investment objectives, risks, charges and expenses of variable annuities and their underlying funds carefully before investing. The prospectus contains this and other information and should be read carefully before investing. The prospectus can be obtained from the financial representative offering the product.
As a result of the account value increasing during the accumulation phase, the growth is not taxable until the distributions are made. This provides the account owner with some very beneficial account growth.
The insurance component, of course, is the guaranteed regular monthly income payment for the rest of your life, reducing the worry of your retirement income budgeting. In addition, should you die before you begin receiving payments, your heirs are guaranteed to receive the full amount of the original principal.
It is important to understand that certain actions outside of the design of your account may result in penalties, additional charges, or penalties that can affect the account value. Be certain that you have read the prospectus thoroughly and understand the ins and outs of the annuity contract. You do not want to be caught unawares of certain provisions and chargebacks. - 23159
The account value in a variable annuity will change depending on how well the portfolio performs. The annuity can only be invested in specific investment types and can change between fixed investments to common stock arrangements.
If the individual elected the life annuity option, then the payments from the annuity may continue for the duration of their life.
There are a number of different options that determine the eventual size of the payments each period. The account value, distribution length, number of beneficiaries, and interest rate all determine the size of the payment.
There are various policy options that may allow you to extend the life on the contact beyond the life of the account holder. With the right options, your children or spouse may be able to continue your options for the rest of your life.
Investors should consider the investment objectives, risks, charges and expenses of variable annuities and their underlying funds carefully before investing. The prospectus contains this and other information and should be read carefully before investing. The prospectus can be obtained from the financial representative offering the product.
As a result of the account value increasing during the accumulation phase, the growth is not taxable until the distributions are made. This provides the account owner with some very beneficial account growth.
The insurance component, of course, is the guaranteed regular monthly income payment for the rest of your life, reducing the worry of your retirement income budgeting. In addition, should you die before you begin receiving payments, your heirs are guaranteed to receive the full amount of the original principal.
It is important to understand that certain actions outside of the design of your account may result in penalties, additional charges, or penalties that can affect the account value. Be certain that you have read the prospectus thoroughly and understand the ins and outs of the annuity contract. You do not want to be caught unawares of certain provisions and chargebacks. - 23159
About the Author:
The world of the fixed annuity can be rather complicated. To get more details on this type of investment, take a minute to check out Luke Murray at The Fixed Annuity Guide.
posted by X - Men @ 6:33 AM
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