The Ins And Outs Of Variable and Fixed Annuities
An individual may purchase an annuity from an insurance company by providing them with a series of payments into the account. In return the account is able to earn tax-free growth for a period of time. In the case of a fixed account annuity, this rate may be fixed for the duration of a specified period.
In a variable annuity, the account value fluctuates based on the performance of the portfolio. The portfolio of the annuity can be shifted between fixed investments or various common stock portfolios or separate accounts.
Starting at the date of the distribution, if the investor chose the life annuity options, they may be able to take distributions for the remainder of their life.
The size of the payment is determined by the account value at the time of distribution, and the duration of the payment period. Life annuity payments will generally be smaller than would the equivalent fixed period payments.
Different policy options may enable you to have payments continue to your spouse, or to your children, or for a minimum number of years, regardless of who receives them after you die. Sometimes these options may impose higher fees to be assessed to the investment.
Investors should consider the investment objectives, risks, charges and expenses of variable annuities and their underlying funds carefully before investing. The prospectus contains this and other information and should be read carefully before investing. The prospectus can be obtained from the financial representative offering the product.
Because the earned income is not taxed until you begin withdrawing the money (presumably at a much lower tax rate), your funds accumulate much faster than they would if they were taxed.
The part of the annuity that is makes it an insurance product is partly due to the guaranteed monthly income payments for the duration of your life (or specified period). This can significantly lower the stress of allocating retirement income. Additionally, if you should happen to die before the contract expires; your heirs may be able to receive the remainder of the account up to the value of the premiums paid in.
Withdrawals or loans will reduce the value of the contract as well as reduce the death benefit. There may be additional costs associated with options or features of a variable annuity that are not typically associated with other investments. Please check the prospectus for details on costs and conditions. The prospectus can be obtained from the financial representative offering the product. - 23218
In a variable annuity, the account value fluctuates based on the performance of the portfolio. The portfolio of the annuity can be shifted between fixed investments or various common stock portfolios or separate accounts.
Starting at the date of the distribution, if the investor chose the life annuity options, they may be able to take distributions for the remainder of their life.
The size of the payment is determined by the account value at the time of distribution, and the duration of the payment period. Life annuity payments will generally be smaller than would the equivalent fixed period payments.
Different policy options may enable you to have payments continue to your spouse, or to your children, or for a minimum number of years, regardless of who receives them after you die. Sometimes these options may impose higher fees to be assessed to the investment.
Investors should consider the investment objectives, risks, charges and expenses of variable annuities and their underlying funds carefully before investing. The prospectus contains this and other information and should be read carefully before investing. The prospectus can be obtained from the financial representative offering the product.
Because the earned income is not taxed until you begin withdrawing the money (presumably at a much lower tax rate), your funds accumulate much faster than they would if they were taxed.
The part of the annuity that is makes it an insurance product is partly due to the guaranteed monthly income payments for the duration of your life (or specified period). This can significantly lower the stress of allocating retirement income. Additionally, if you should happen to die before the contract expires; your heirs may be able to receive the remainder of the account up to the value of the premiums paid in.
Withdrawals or loans will reduce the value of the contract as well as reduce the death benefit. There may be additional costs associated with options or features of a variable annuity that are not typically associated with other investments. Please check the prospectus for details on costs and conditions. The prospectus can be obtained from the financial representative offering the product. - 23218
About the Author:
The world of fixed rate annuities can be rather complicated. For more information on these insurance products, take a minute to check out Luke Murray at The Fixed Annuity Guide.
posted by X - Men @ 7:34 AM
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