Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
The word, “annuity” probably dates back to Rome. The “annua” was an annual payment. There were some arrangements where the payment lasted the lifetime of the recipient. Tables for these payments were developed during the Roman Empire and used to compensate soldiers for their service. They received a life time of annual payments.
Most annuities are ordinary annuities - the payment (income payment) is paid at the end of the period. For example you invest in an income annuity today and one month later your monthly income starts.
An annuity due requires payment at the beginning of the period.
If you have further questions, you can contact me through this website or www.jpw.ca
That is a great question! The definition of an annuity is " any stream of payments that has a fixed total." When we use the word in our financial word, we are referring to an investment vehicle designed for providing a long lasting income stream. They are offered by insurance companies and other financial institutions, and are used to fund retirements, grants and trusts.
Here's a very simple description of how an annuity works: They are funded by a deposit, which then sits for a number of years gathering interest. After that period of time, the annuity begins paying out a set amount until either it runs out, the owner dies, or the owners spouse dies, depending upon how the annuity is structured. It guarantees that there will be an income that lasts as long as you do.
Because they require that the deposit sit untouched for many years, an annuity may not be a good investment for some people. That deposit money can be taken out, but there are very costly penalties. As a result, regulations require that the seller sit down with you first and do what is called a "suitability study." They will go over your financial situation, your retirement plans, and your goals. If it is found to not be "suitable" for you, they cannot sell you one. This protects folks that may have need for that cash from being trapped into a losing investment.
I hope that answers your question for you, if you'd like more detail, I'd be happy to help, feel free to contact me, okay? Thanks for asking!
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An annuity due requires payment at the beginning of the period.
If you have further questions, you can contact me through this website or www.jpw.ca
Here's a very simple description of how an annuity works: They are funded by a deposit, which then sits for a number of years gathering interest. After that period of time, the annuity begins paying out a set amount until either it runs out, the owner dies, or the owners spouse dies, depending upon how the annuity is structured. It guarantees that there will be an income that lasts as long as you do.
Because they require that the deposit sit untouched for many years, an annuity may not be a good investment for some people. That deposit money can be taken out, but there are very costly penalties. As a result, regulations require that the seller sit down with you first and do what is called a "suitability study." They will go over your financial situation, your retirement plans, and your goals. If it is found to not be "suitable" for you, they cannot sell you one. This protects folks that may have need for that cash from being trapped into a losing investment.
I hope that answers your question for you, if you'd like more detail, I'd be happy to help, feel free to contact me, okay? Thanks for asking!