Annuities – Things You Need to Know
To prepare for their future, individuals invest their hard earned money in investment vehicles sold by insurance companies and in return, they will receive a regular stream of payments during their retirement. Annuities are one of the most popular investment vehicle offered by insurance companies not only for the financial security they offer but because of the higher rates that adds to the savings of the investor. These are nothing like any other insurance policies found in the market. They can be beneficial with the many helpful features that they offer.
An annuity is a contract between you and an insurance company. You purchase an annuity with a certain amount of money either in a lump sum payment or several installments in exchange for monthly payments in the future made by the insurance company. You can choose to receive payments until your death or for a definite time period only. As a result, annuities are a secure and stable investment that will provide you income.
Other main features of annuities are the fact that they have a tax deferred nature. You are exempted from paying taxes until disbursements have started. This will allow you to invest more for your retirement savings and thus will provide you greater payments. Annuities offer higher rates of return and the growth of your investment and the payouts are faster than any other types of retirement policies. Your investments are also more secured with an annuity.
Another benefit you get from an annuity is that you are able to sell it for cash. Individuals who choose to do this are those who are in need of a lump sum amount of money in just a short period of time. But you are probably wondering this: “I want to sell my annuity but I also need the benefits from it.” Good news is, you don’t have to sell the entire annuity, and you can always choose to sell just a portion of it. This way, you will still be able to receive the remaining income of the annuity.
Before investing in an annuity, it is important to analyze if it will be beneficial to you and your current financial status. For more advices regarding annuity, there are articles you will find online. You can also seek the help of an annuity specialist.