This
guide contains:
Background on annuities
Features and qualities to look for in annuities
How
to find the best annuity for you
This
short guide was created to help you understand the basics
of annuities, and to help you choose the right annuity
for you. We do not offer any annuities ourselves, so
you can be assured that all of the information in this
guide is independent and unbiased.
Background
on annuities
Annuities are financial products that allow you to pay
a lump sum up front to an insurance company in exchange
for receiving equal payments from the insurance company
in the future. Annuities can be immediate, which means
that you pay a lump sum to start the annuity, or deferred,
in which case you save money over time with the intent
of creating an annuity at a later date. For deferred
annuities, you can choose a fixed rate annuity, which
guarantees you a certain rate of return during the growth
phase, or a variable rate annuity that offers potential
for a higher rate of return but no guaranteed minimum
rate.
Annuities
are financials tools that can help people plan for and
manage their retirement. Annuities provide security
(your income stream is guaranteed), simplicity (nothing
to manage once the annuity has been purchased), and
a better interest rate than you can find with banks
or some other financial instruments. There are also
some tax advantages to annuities, depending on what
funds you use to purchase the annuity. [Please make
sure to consult a qualified professional who will analyze
your specific situation.]
Features
and qualities to look for in annuities
There
are many versions or ways of structuring annuities:
Single
Life Annuity
This type of annuity provides a monthly income for one
person as long as you live. However, if you die, the
annuity may (or may not, depending on the specific annuity
you have chosen) continue to pay the monthly amount
to your beneficiary for a certain period of time. For
example, with a 15 year guaranteed single life annuity,
if you die in the 5th year, the annuity will continue
to pay your beneficiary until the 15-year term is over.
Joint
Lives Annuity
This type of annuity provides a monthly income for two
spouses as long as you both live. If one spouse dies,
the annuity will continue to pay the monthly amount
until the second spouse dies. When the second spouse
dies, the annuity may (or may not, depending on the
specific annuity you have chosen) continue to pay the
monthly
