Why Invest in Life Annuities?

Annuities have been around for a very long time. In the Roman Empire citizens were encouraged to make a one time investment and in return get an ‘annua’ or annual stipend for life. At that time governments offered it and slowly insurance companies began to offer attractive terms for annuities. Annuities are an excellent way to invest your money and create a savings that will assist you through the retirement years. People are living longer than they used to and thus need their income to last them comfortably through their lifetime. There are many different types of annuities such as fixed and variable annuities, life annuities, immediate and deferred annuities, etc. Due to the variety of annuities and the varied terms and conditions they offer virtually everyone finds it comfortable and feasible to invest in annuities. It is important to systematically invest in your future and life annuities help you do just that. Life annuities require working professionals to contribute regularly to the annuity during their working years in order to create a steady source of income for their retired years. The rate of interest on life annuities is fixed for a period of time and thereon revised.

Why Invest in Life Annuities?

Life annuities offer investors a number of advantages and some of these include:

Life annuities offer flexible terms and an individual can invest by paying a one time premium or by making regular contributions to the annuity. Thus it suits both people who have a large sum of money to invest and those who slowly want to increase their savings.
The life annuities help in creating a savings that will provide a regular source of income even after retirement.
Life annuities are tax-deferred. Life annuities are not taxed yearly but in fact the tax is deferred until the investor makes a withdrawal or begins to receive income from the annuity. Furthermore the gains are taxed as income.
Life annuities offer a better rate of return than bank accounts and CDs.
Though you would have to pay a certain amount of money for early withdrawal an investor may withdraw funds from the annuity earlier than planned.
Monthly income received from the life annuity is dependent on the age and gender of the individual, type of annuity and the time period of the annuity. The monthly income can be set after due consideration and in case the individual wishes a higher income then investment will need to increase proportionately.
Most life annuities also offer a bonus at the end of each year, depending on the investment return during that period.
The investor has an option of choosing a larger monthly income or an option of refund on early death.
If the life annuity is held jointly then in the event of the death of one partner the other will continue to receive payment from the annuity. However the monthly payments for a joint annuity are lower as the life expectancy of both investors is taken into account.

Life annuities are an ideal investment for all working professionals who wish to plan and save for their retirement.

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