Non-qualified annuities that are annuitized for the life of the annuitant guarantee life time income based on the annuitant’s life no matter how long the annuitant lives. Part of the annuitized payment is return of basis (tax free) amortized to life expectancy with some of the gain as well. When the basis is exhausted then the payment is entirely gain and taxable as ordinary income. That can be a good idea.
But product suitability is very important and one of the items of suitability is a establishing a risk tolerance assessment. Non-qualified deferred annuities have three basic crediting methods: fixed interest rate crediting in an annuity, indice crediting in index annuity and crediting or sometimes debiting in separate sub accounts in variable annuities. Was you determine which crediting method fits your risk tolerance, then you should decide how long your annuity position should be and does the policy have any benefits for maintaining it in force.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
Annuities are issued by life insurance companies. Annuities are good if you require a lifetime income. This is the reason annuities exist. They solve the issue of living too long and running out of money. Annuities are good if you want to accumulate money over an extended period of time. The interest earned by the annuity is deferred until withdrawn. There are many different variations on annuities with more being developed. Some are quite aggressive others are quite conservative but they all operate within the same format.
Agent Owner, Gilmore Insurance Services, Marysville, Washington State
When are annuities a good idea? 24/7/365 depending on your needs and wants. If the market scares you or your age makes it difficult to survive a market correction, annuities make great sense. They provide a safe platform for money to grow with minimal risk. They do have their own inherit risk however, which would be inflation risk. That is while your money is growing safely, it may not grow fast enough to keep pace with inflation.
When you go to spend your retirement, immediate annuities make great sense to include for a simple reason, you can't outlive an annuity.
An immediate annuity sets up a steady stream of payouts that can last as long as you live, or a set period of time if you pass early. They also can be set up with an inflation rider to help keep pace with inflation.
As with any investment choice, it is wise to have other "choices" going on at the same time. One single product does not solve a person's entire needs for retirement.
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But product suitability is very important and one of the items of suitability is a establishing a risk tolerance assessment. Non-qualified deferred annuities have three basic crediting methods: fixed interest rate crediting in an annuity, indice crediting in index annuity and crediting or sometimes debiting in separate sub accounts in variable annuities. Was you determine which crediting method fits your risk tolerance, then you should decide how long your annuity position should be and does the policy have any benefits for maintaining it in force.
When you go to spend your retirement, immediate annuities make great sense to include for a simple reason, you can't outlive an annuity.
An immediate annuity sets up a steady stream of payouts that can last as long as you live, or a set period of time if you pass early. They also can be set up with an inflation rider to help keep pace with inflation.
As with any investment choice, it is wise to have other "choices" going on at the same time. One single product does not solve a person's entire needs for retirement.