Is An Immediate Annuity For You Or Are Variable Annuities A Better Choice?

Investors have a number of different options available to them when it comes to annuities; each with different interest rates costs & other advantages & disadvantages. Keep reading to find out more about annuity options which you may be interested in.

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 & 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.

Alternatively you can receive a deferred annuity insurance in which the payouts are deferred until some specific time or date in the future. Here the principal sum is invested & is let to grow in to a tax deferred income over some time. These are an extremely common type of annuity insurance & are most preferred by people who need a tax deferred investment opportunity in order to save up for their retirement days as with a retirement annuity or even an index annuity. Of course if you’re younger than 60 this is your only option. The terms “immediate” & “deferred” only related to an annuities payment schedule. Both options are open to investors regardless of whether they choose a variable fixed or indexed annuity.

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 & 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 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.

Annuities are a complex issue & if you’re looking for one of these investments it may be a good idea to speak with a financial professional before you make a decision.

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