Tuesday, September 15, 2009
What Is An Annuity?
An Annuity is a contract between someone and an insurance company. An annuity provides a certain amount of return for a period of time. There are two types of annuities: Fixed and Variable. Fixed will provided a specified return. Variable will provide a minimum and the maximum is determined by the stock market. Variable Annuities only fit a very specified buyer, typically mutual funds are more appropriate. Fixed Annuities provide a healthy return and have a set amount. They provide stability and when C.D. rates are down are the best alternative. Annuities provide tax benefits as well. Talk with your adviser about your opportunities to discover the potential.
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Another meaning.
ReplyDeleteTo put it simply, annuity is when an individual signs a contract with their insurance company. This contracts states that the individual will make a lump sum or series of payments to the insurance company. I know that sounds like what you always do for your insurance company, right? However, with an annuity the insurance company will make payments back to you beginning either immediately or at a future date. An annuity usually offers growth of earnings and tax deferred status, as well as the possibility of a death benefit that will pay a certain amount to a beneficiary upon your death. Essentially any money you pay in to an annuity will be paid back to you plus any earnings of the initial payment in periodic payments monthly, quarterly, or annually.