Annuities Quote Forms
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Why do people buy Annuities?
People typically buy annuities to help manage their income in retirement. Annuities provide three things:
- Periodic payments for a specific amount of time. This may be for the rest of your life, or the life of your spouse or another person.
- Death benefits. If you die before you start receiving payments, the person you name as your beneficiary receives a specific payment.
- Tax-deferred growth. You pay no taxes on the income and investment gains from your annuity until you withdraw the money.
What kinds of annuities are there?
There are three basic types of annuities, fixed, variable and indexed. Here is how they work:
- Fixed annuity: The insurance company promises you a minimum rate of interest and a fixed amount of periodic payments. Fixed annuities are regulated by state insurance commissioners.
- Variable annuity: The insurance company allows you to direct your annuity payments to different investment options, usually mutual funds. Your payout will vary depending on how much you put in, the rate of return on your investments, and expenses. The SEC regulates variable annuities.
- Indexed annuity: This annuity combines features of securities and insurance products. The insurance company credits you with a return based on a stock market index, such as the Standard & Poor’s 500 Index. Indexed annuities are regulated by state insurance commissioners.
What are the benefits and risks of variable annuities?
Some people look to annuities to “ensure” their retirement and to receive periodic payments once they no longer receive a salary. There are two phases to annuities, the accumulation phase, and the payout phase.
- During the accumulation phase, you make payments that may be split among various investment options. In addition, variable annuities often allow you to put some of your money in an account that pays a fixed rate of interest.
- During the payout phase, you get your payments back, along with any investment income and gains. You may take the payout in one lump-sum payment, or you may choose to receive a regular stream of payments, generally monthly.
All investments carry a level of risk. Make sure you consider the financial strength of the insurance company issuing the annuity. You want to be sure the company will still be around, and financially sound, during your payout phase.
Variable annuities have several features that you need to understand before you invest. Understand that variable annuities are designed as an investment for long-term goals, such as retirement. They are not suitable for short-term goals because you typically will pay substantial taxes and charges or other penalties if you withdraw your money early. Variable annuities also involve investment risks, just as mutual funds do.
If you like more specific Annuity information please,
- Call (800) 624-8976, and one of our ECIA Annuity specialists will service your immediate needs,
- Or, complete the contact request form and one of our ECIA Annuity specialists will contact you the same day, or worse case the following day.