Selecting An Annuity That Is Right For You

Savings is a crucial aspect that all professionals, old and young, need to consider. It is important to find an investment that assures security as well as good returns so that you are able to create a nest egg that you can fall back on. Whether the investment is made in an attempt to create a retirement plan or as a way to save money and gain additional tax benefits annuities are a wonderful way to secure your financial future.

An annuity is essentially a contract between an insurance company and an individual or individuals. The basic idea is that the investor pays a premium and can receive payments or a lump sum amount, according to the type annuity that they have invested in. There are various types of annuities and judging the one that is best for a person would require an assessment of what exactly they expect to gain from it. Some of the types of annuities include the following:

Fixed annuities have a determined rate of interest that the insurance company promises to pay to the investor. Unlike variable annuities the amount received by the investor in a fixed annuity is not dependent on the performance of the investments made by the insurance company. Thus as long as the insurance company is solvent the individual is assured a particular sum of money. This is a good option for people who are looking for a stable and dependent investment.
A variable annuity is basically a fund such as the mutual fund that individuals can invest in and get variable returns. The performance of the variable annuities is dependent on the stock market and hence is volatile. This option is high risk and should be given due consideration before the investment is made.
Deferred annuities allow investors to receive the premium and added amount at a later date as decided by them. This is an ideal option for those who want to utilize the annuity as a retirement plan.
Immediate annuity provides income one time-period after the investment is made. It is a good option for investors looking for money soon after making the premium payment.
An equity-indexed annuity provides investors the advantages of both the fixed as well as variable annuities. It has a basic rate of interest like a fixed annuity and is also valued for its performance in the market. This is a good option for investors who want a fixed return from the annuity but would also like to benefit from the superior performance of the insurance company in the market.
The market value adjusted annuity lets the investor to decide on the time frame and rate of interest available on the annuity. Furthermore it allows the option of withdrawal of funds prior to the end of the chosen time period. This allows the investor a lot of freedom in his investments.
A fixed period annuity has a pre-determined time period and rate of interest and is not dependent on the age of the investor. It is a great option for those who want a secure investment.
A lifetime annuity provides the investor returns through his or her lifetime.

There are many types of annuities that cater to the demands of all types of investors. Thus it is important to select one that is just right for you by first understanding what you expect of the investment and which one provides it. The tax benefits from annuities are an added advantage to your saving and growth plans.

ˆ Top