Fixed Annuity
A fixed annuity is a contract that lets you invest your money with an annuity carrier; and in return, the carrier will pay you a fixed, stated rate of return. The interest rate is guaranteed for a certain period of time, such as a year, and then the rate will change, based on current market conditions. You will be notified of what your new rate will be and then that rate is locked in for another period of time, for example, another year.
There’s also a “minimum” guarantee rate so you know that your money will always earn a certain amount no matter how low interest rates fall.
Immediate Annuity
An immediate annuity is for someone with a lump sum of money who is interested in immediately turning that amount of money into a guaranteed income stream.
Unlike other types of annuities: fixed, index or variable, which are also called deferred annuities; the immediate annuity doesn’t accumulate any earnings for you at all. It’s purchased strictly to provide you an income payment on a regular basis which begins right away.
Index Annuity
With an index annuity, you receive a guaranteed minimum interest rate, but could potentially receive a higher crediting rate based on the performance of one of a variety of market indices. There are many types of index annuities and an AnnuityScene.com licensed professional can show you more specifically how an index annuity may be suitable for you.
Variable Annuity
A variable annuity is one type of annuity that’s different from the index or fixed type annuity. A variable annuity comes with a menu of professionally managed investment options in which to allocate your annuity investment. Most variable annuities offer a wide range of investment options to suit your tolerance for risk, from conservative to aggressive. Variable annuities even offer a “fixed” option for investors who want to keep a portion of their annuity investment earning a fixed rate of interest.
Deferred Annuities
A deferred annuity is a written contract between you and a life insurance company in which the insurance company makes a series of regularly spaced payments to you in exchange for a premium or premiums you have paid. A deferred annuity helps you accumulate money for future income needs. The most common use for a deferred annuity is to fund retirement.
Life Insurance Annuities
Life insurance annuities can be a confusing term for several reasons. First, life insurance can be structured to provide a stream of income from the life insurance policy at a point in the future. This makes the life insurance policy appear to act like an annuity, but in reality they are very different. Second, annuities are issued by insurance companies. Most of the insurance companies offering annuities also offer life insurance.
Life Annuities
Life annuities offer a guaranteed income stream for the life of the annuitant. Life annuities are typically funded with a lump sum payment. A life annuity pays a pre-determined periodic payment (monthly or annually) to the annuitant until there death. At death, payments will usually discontinue.
Retirement Annuity
While planning for a stress free retirement isn’t a sure thing, making sure you have enough money to sustain your post-work lifestyle is very important. There are a growing number of seniors and retirees who often find themselves with inadequate savings to last them through retirement. Almost half of all seniors will outlive their life expectancy. A retirement annuity can be purchased with a number or sources, including: Certificate of Deposit (CD), existing deferred annuities, 401(k) plan, IRA, savings accounts, and more.
Pension Annuity
Using a pension annuity can reduce the risk associate with outliving retirement savings. There are generally two different types of pension annuities: deferred pension annuities or immediate pension annuities. Most pension plans, including individual retirement accounts (IRAs), will allow the plan to purchase an annuity with the money in the pension plan. You may decide to use a portion of the money in your pension plan or all of it. At the end of the day it is entirely up to you.
