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.
|
 |
|
|
