Versatility of Annuities

When you are considering investing your savings the primary features that you should be looking for in an investment vehicle are: security, flexibility and versatility. And of course great returns! Annuities are state regulated contracts that are offered only by insurance companies, and as long as the insurance company is solvent your investment is safe and secure. Annuities are of many different kinds and have varied features that investors can benefit from. The flexibility offered by the wide array of annuities allows people to select an annuity that suits their financial needs optimally. Annuities are versatile in both the income accumulation stage, the period where you make investments, and also in the pay out stage, when you receive income from the annuity.

How Versatile Are Annuities?

The versatility of annuities lies in the diversity of its products, and options that they offer investors. For instance an annuity can be bought by making a single premium payment or by paying regular premiums over a certain number of years. Thus it is useful for people such as businessmen who have a bulk amount of money to invest or for those who have unexpectedly come into a large sum of money and also for people who want to create a regular source of income for their retirement by putting away a certain portion of their savings on a regular basis.

The many different types of annuities include the following:

Fixed annuities: These offer a fixed rate of interest for a certain number of years, the rate of interest may be revised from time to time.
Immediate annuities: An immediate annuity provides income almost immediately after the annuity is bought.
Deferred annuities: For people who wish to defer receiving income from the investment or annuity for a long time the deferred annuity is ideal.
Equity-indexed annuities: This category of annuities allows investors to earn a basic rate of interest and also gain from the good performance of a stock index.
Lifetime annuities: Buying a lifetime annuity ensures that you will receive income for the rest of your life.

Even in the payout phase the investor may choose to receive income for lifetime or for a fixed number of years such as 15 to 20 years. Also income from the annuities may be received on a monthly, quarterly and yearly basis as is convenient to the investor.

Annuities offer a good rate of return, better than other traditional long-term investments such as CDs. Also as they are tax deferred, this feature allows the investment to compound. When income is received from the annuity only the gain part is taxed as ordinary income. Whatever the financial condition or situation of an investor there is an annuity that meets the needs of every individual and helps them create a personal pension plan.

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