- Different types of annuities
- July 16, 2015
Despite gloomy economic forecasts, there are a variety of options for investors. Because annuities are tax-deferred, they are often an attractive choice.
An annuity is created when an insured party gives life insurance companies money that gets distributed back to the insured party over a certain period of time.
There are several kinds of annuities. Immediate annuities can be fixed or variable. A fixed immediate annuity payment depends on the amount contributed, the age of the investor and the interest rate at time of purchase. Fixed annuities guarantee a certain payment amount.
Typically, both types are relatively safe, low-yielding investments.
A tax-deferred annuity pays out to investors who prefer payments to begin at a future date, typically retirement, allowing income tax to be deferred until the money is withdrawn. One of the advantages of having an annuity is that an investor can contribute as much money as he or she likes each year.Pages: 1 2
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