Quick Financial Advisor Guide To Annuities

Financial AdvisorAnnuities are among the most popular retirement investment options on the market. Some of them are also safe and convenient financial products that allow you to protect your money and ensure a fruitful retirement.

But what are annuities and how do they work? There are different types of annuities, each of which characterized by considerable advantages and some disadvantages you should be aware of before choosing the type of annuity for your retirement.

Here are some guidelines that can help you understand the real nature of this investment vehicle and the different options included.

What is an annuity?

The term annuity refers to a contract with an insurance company that allows you to grow a nest egg. According to this type of investment option, you can agree with the insurance provider a payment plan that offers you several benefits.

How to annuities work?

Annuities are classified as a deferred investment vehicles. It means that to obtain a retirement income you need to regularly pay a premium to a life insurance company over a certain period of time. The sum of money accumulated will be then distributed back to you in your senior years.

This category of investment products is also tax-deferred, meaning that you’ll have to pay anytime you’ll need to withdraw money from your account.

Depending on the payment plan agreed with the insurer, you can either get a regular retirement income as agreed with the insurance provider, for example as a fixed annuity, and choose additional options to further grow your wealth.

Types of annuities

There are many different types of annuities which vary depending on the payment plan you choose.  However, there are three types of annuities that can be considered highly safe and also very convenient for those who wish to plan a fruitful retirement. These are:

  • Single Premium Immediate Annuity

With this type of annuity it is possible to accumulate a nest egg over time and get a guaranteed income on your retirement. That income will correspond to a part of your savings that you will be able to receive immediately while the rest of your savings is invested to produce larger gains in the future.

  • Fixed annuity

This product is specifically designed to ensure you a fixed retirement income without any variation of the amount of money during your retirement. As long as you pay the premium, the amount of money accumulated grow at a fixed growth rate over a period of time. Once you retire, you will be able to withdraw every year a fixed amount of money as agreed with your insurance provider.

  • Fixed index annuity

This product allows you to grow a nest egg and to rise your gains according to the market performance. It is based on the crediting strategy, which is aimed to limit the influence that the market can have on your nest egg. This way, you can increase your earnings but at the same time you are free to limit your gains in order to reduce risks.

Advantages of safe annuities

Guaranteed class annuities are among the many crash proof investment options that are on the market. This is why they have considerable advantages. First of all, this type of safe investment product is specifically designed to allow people to grow their nest egg while protecting their money from severe market loss. This is the main strong point of this class of financial products which make them perfect for a safe retirement plan.

Federica is a freelance writer from FSFG providing safe investment solutions with a team of financial advisors in Philadelphia.

Share this post:

Related Posts

One Comment

  1. vestidos evening baratos says:

    Nice article :) Every weekend I utilized to go to see this site, as i want pleasure, since this this website contain actually pleasant humorous material also.