Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
Annuities are very complex. Selecting the best annuity is a function of needs. At their core annuities provide a lifetime of uninterrupted income. Nothing else can guarantee that result. It takes the risk of outliving your money off the table. The single premium annuities are the basis upon which every other annuity is developed.
Development of annuities has followed two general lines. The first is the accumulation of money and the second is the distribution of money.
Annuities can be funded with a single premium or a flexible series of premiums. Since the Internal Revenue Code recognizes the value of annuities the growth that the money placed in an annuity experiences is not subject to current income taxes. These deferred tax plans can have powerful advantages over alternative investments.
Annuities can earn income in a variety of ways. Some are guaranteed while others are not. Some have guaranteed rates and also allow that the rate can increase as market conditions make that possible. There are many schemes to determine interest rates but many contracts guarantee a minimum rate below which they will not fall.
Annuities are often sold with interest bonuses for a specified period of time. These bonuses are inducements to purchase the annuity but are often tied to the surrender period of the contract. Since an annuity is a long term cash accumulation plan withdrawing money early from the contract is subject to surrender charges over a specified period of time in most contracts.
There are a number of ways benefits can be paid under annuities because there are a wide variety of needs. The traditional way is in a lifetime flow of regular payments. When a person is concerned that they might make a deposit and then die shortly afterwards there are options that can be selected that make payments for a specified period of time to either the annuitant or beneficiary. Others make lifetime payments as long as one of two people is alive. There are even options that make lifetime payments as long as one of two people are alive but will pay a beneficiary if both die prior to the end of a certain period of time. In addition to options that provide a benefit for a period certain, there are also similar options for return of deposit.
There are annuities that defer the payment of the benefit for an extended period of time. The advantage of this type of annuity as that you are able to purchase an amount of money that won’t be delivered for a long time and all that growth and interest is being deferred from current income tax. These policies can make a tremendous increase in income and may be used to offset anticipated cost of living increases.
Annuities come with several riders that guarantee various aspects of the contract. When the cash value of the annuity isn’t guaranteed you can purchase a rider that will pay a specified lifetime income even if the account balance is exhausted.
Annuities are complicated and there are companies trying new ideas every day. You will probably find that there is an annuity that will play an important role in your retirement income planning.
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Development of annuities has followed two general lines. The first is the accumulation of money and the second is the distribution of money.
Annuities can be funded with a single premium or a flexible series of premiums. Since the Internal Revenue Code recognizes the value of annuities the growth that the money placed in an annuity experiences is not subject to current income taxes. These deferred tax plans can have powerful advantages over alternative investments.
Annuities can earn income in a variety of ways. Some are guaranteed while others are not. Some have guaranteed rates and also allow that the rate can increase as market conditions make that possible. There are many schemes to determine interest rates but many contracts guarantee a minimum rate below which they will not fall.
Annuities are often sold with interest bonuses for a specified period of time. These bonuses are inducements to purchase the annuity but are often tied to the surrender period of the contract. Since an annuity is a long term cash accumulation plan withdrawing money early from the contract is subject to surrender charges over a specified period of time in most contracts.
There are a number of ways benefits can be paid under annuities because there are a wide variety of needs. The traditional way is in a lifetime flow of regular payments. When a person is concerned that they might make a deposit and then die shortly afterwards there are options that can be selected that make payments for a specified period of time to either the annuitant or beneficiary. Others make lifetime payments as long as one of two people is alive. There are even options that make lifetime payments as long as one of two people are alive but will pay a beneficiary if both die prior to the end of a certain period of time. In addition to options that provide a benefit for a period certain, there are also similar options for return of deposit.
There are annuities that defer the payment of the benefit for an extended period of time. The advantage of this type of annuity as that you are able to purchase an amount of money that won’t be delivered for a long time and all that growth and interest is being deferred from current income tax. These policies can make a tremendous increase in income and may be used to offset anticipated cost of living increases.
Annuities come with several riders that guarantee various aspects of the contract. When the cash value of the annuity isn’t guaranteed you can purchase a rider that will pay a specified lifetime income even if the account balance is exhausted.
Annuities are complicated and there are companies trying new ideas every day. You will probably find that there is an annuity that will play an important role in your retirement income planning.