What Are Annuities?

By: Stewart Epstein

Annuities are simply retirement savings plans offered by insurance companies.


( S T Y L E ) Safety, Tax Advantages, Yield, Liquidity, Estate Advantages.


Your money is protected by financially secure insurance companies, that hold Reserves mandated by law. Insurance companies are closely Regulated by State Insurance Departments. All Fixed Annuities, Protect and Guarantee Your Principal. How ? Your Accumulated Annuity Contract Value, which equals all of your Principal, Deposits, Cash Bonuses, and credited Interest Income, are not physically in the market(s). Instead, insurance companies credit interest to your annuity contract, by offering crediting options that parallel the S&P 500, Bond Market, or a fixed rate that is specified.

What Is So Good About This ? By averaging either the monthly or annual performance of a financial market, you are offsetting the bad with the good results. In other words, during volatile times in the market(s), the highs & lows offset each other, and you are more likely to see positive results in interest income, as opposed to a loss. With Equity Indexed Annuities, you can never have a loss. The poorest results are just 0 = no gain.

Tax Advantages: As Interest is credited to your Annuity, it is not considered taxable income until you withdrawl it. Therefore, you receive Triple Compounding:

1. Interest on Your Principal.

2. Interest on Your Interest

3. Interest on taxes that you do not have to pay, until later.

- To encourage using these savings only for retirement, there is a 10% tax penalty on any withdrawl of interest, prior to age 59 1/2.

- Tax law requires clients to begin receiving minimum distributions, by April 1st of the year after they reach 70 1/2. ( Qualified Funds Only)

Yield: Some Annuities offer a fixed interest rate set by the company, prior to the start of your contract or anniversary date. These rates are typically higher then interest rates on CD's, Savings Accounts, or Money Market Funds.

In addition, some Annuities credit an interest rate that is tied to the performance of a stock or bond index. These Annuities offer exciting upside potential, without risk to principal.

Liquidity: All Annuities have Surrender Charges, for a specific number of years. During the surrender charge period, annuities allow for periodic penalty-free withdrawls, and often provide a waiver of the surrender charge for certain hardships. ( Example: Nursing Home Waiver: See your specific contract for details.) Surrender charges are avoided by taking no withdrawls in excess of the penalty free allowance, until the surrender charge period is over.

It is very important to understand these features, so as to chose an annuity that meets your specific financial requirements, for both the present and future.

With a Fixed Annuity, there are No up front charges or administration fees, during the life of your contract.

Estate Advantages: At death, Annuity proceeds are paid directly to beneficiaries, without the delays & expenses associated with probate. You can elect the payment method, either a lump sum or other specified type of allocation, within your contract.

Additional Benefit: Some Annuity Plans offer an Initial Premium Bonus. An insurance company will credit your annuity with a fixed % of your deposits. This is commonly referred to as a Premium or Cash Bonus. Typically, these have slightly longer surrender charge periods. ( It is recommended that you discuss your personal liquidity requirements with a licensed professional, to see if a Cash Bonus is a good fit for you.)


   Sponsored Links

Ciudades Populares / Top Cities
Los Angeles, CA
New York, NY
Miami, FL
Ft Lauderdale, FL
San Francisco, CA
Oakland, CA
San Jose, CA
Chicago, IL
Houston, TX
San Antonio TX
Victoria, TX
McAllen, TX
Brownsville, TX
Dallas, TX
Ft Worth, TX
San Diego, CA
Fresno, CA
Visalia, CA
Albuquerque, NM
El Paso, TX
Sacramento, CA
Stockton, CA
Phoenix, AZ
Philadelphia, PA
Denver, CO
Corpus Christi, TX
Washington, DC
Boston, MA
Tucson, AZ
Austin, TX
Salinas, CA

Monterey, CA
Tampa, FL
St Petersburg, FL
Bakersfield, CA
Orlando, FL
Daytona, FL
Melbourne, FL
Hartford, CT
New Haven, CT
Laredo, TX
Santa Barbara, CA
Santa Maria, CA
San Luis Obispo , CA
Odessa, TX
Midland, TX
El Centro, CA
Yuma, AZ
Seattle WA
Tacoma, WA
Lubbock, TX
Palm Springs, CA
Colorado Springs, CO
Pueblo, CO
Salt Lake City, UT
Las Vegas, NV
West Palm Beach, FL
Ft Pierce, FL
Vero Beach, FL
Portland, OR
Detroit, MI

Copyright © Seguro-Insurance.com