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What are the different types of annuities?
  There are many types of annuities for a variety of different needs and budgets. Your age and risk tolerance should weigh heavily in your decision regarding the type of annuity in which to invest.

When considering an annuity, you will have to decide when you want to receive the money. If you invest in an immediate annuity, you would receive the income now, while a deferred annuity would be a savings vehicle for the future.

  • Immediate annuity: You pay the insurer a lump sum of money in exchange for receiving income for a set period of time or for as long as you live. You usually start receiving payments immediately after transferring funds into an annuity.

  • Deferred annuity: This is a long-term retirement savings vehicle, which builds savings on a tax-deferred basis.
You will also need to select how your money will be invested. You can invest your money so that you get a stable rate of return or you can pick an annuity where your money is invested in the stock market. You can pick one or a combination of the following:

  • Fixed annuity: This provides a stable, guaranteed rate of return.

  • Variable annuity: The annuity is invested in the stock or bond market. As a result, you assume some financial risk in return for a potentially higher economic reward.
Life insurance companies offer many combinations of the above, with a number of special features.

source :iii.org
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