Is An Immediate Annuity For You Or Are Variable Annuities A Better Choice?
There are numerous types of annuity options available that have differing benefits, interest rates and costs. Here are the different types of annuity options available:
Immediate Annuity: Just as the name suggests, the investor starts receiving their payout from an immediate annuity right away. The payout might continue for the life of the investor or for a specified period of time as set in the annuity contract’s terms. If you withdraw money from your annuity prematurely (in the US, this is before you’re 59 years and six months of age) there are tax penalties, which makes the immediate annuity an option which is largely limited to persons who are of this age or older.
Instead of this arrangement, you could opt for deferred annuity insurance. This defers payouts from your annuity until a date specified in the agreement. In the meantime, the principal of your annuity is invested and is allowed to grow as tax deferred income. This is a very common option and is one of the most popular with people looking for a tax deferred investment vehicle to save for their retirement, much like an index annuity or a retirement annuity. If you happen to be under 59 in age, a deferred annuity is of course the only kind you’ll be able to choose from. However, it’s important to keep in mind that when people talk about deferred or immediate annuities, what they’re really talking about is the payment schedule of the annuity – which is something which investors do have a say in regardless of whether they decide on fixed, indexed or variable annuities.
Fixed annuities are the most popular of any type of annuity, even more so than variable annuities. These investment provide an interest rate which is locked in, making it a safe investment. Fixed annuities are particularly popular when the stock markets are in a decline, since there are fixed annuities with interest rates as high as 8%; very good compared to bonds and CDs.
Variable annuities are the second most popular type of annuity. These investments allow investors to put their principal into the stock market or other investments. There is a higher degree of risk associated with variable annuities, though a well informed investor can exercise some influence on exactly how much risk they’re exposed to.
When attempting to purchase the best annuity option, consider consulting with a professional.
Investigate annuity quotes online and other types of annuities visit http://www.variableannuityquote.com
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