Annuity Advantage For Your Financial Peace Of Mind
The annuity advantage that is bestowed upon such investors is enjoyed by millions of ordinary people throughout the world. If you want the same level of financial security, you will be happy to learn that it is never too late to join them.
Annuities are investment contracts drawn up between you, the investor or annuitant, and a second party, usually an insurance company. In return for paying over a lump sum, or an agreed series of premium payments, the annuitant effectively buys financial peace of mind for the future, as he is investing his money now for a guaranteed future income until the day he departs this life.
There are several different types of plans obtainable. One can have a fixed annuity where there is a guaranteed, specific rate of return, or a variable annuity, where the rate of return can go up or down and, consequently, be higher or lower than the return guaranteed under a fixed term. There are also equity indexed annuities that guarantee a minimum rate of return over time, but link the invested sum to the performance of an index. When the index goes up, the investor shares in the additional profit, but if the index stays flat or goes down, the investor gets the agreed minimum.
Most annuities have a range of optional features which, while necessitating a higher cost premium, provide a higher guaranteed return. Such features may include a minimum withdrawal assistance and a minimum death assistance.
Furthermore, there are also immediate annuities, which start to deliver a return now, and deferred annuities which deliver a return at some agreed time in the future. While it is possible to take a lump sum from the policy, depending upon the details of the agreement, many millions of people opt for having an income stream, or a regular sum paid out every month or year for the rest of their lives. It is also possible to extend the guarantee to you and one other person such as a spouse or a grandchild.
This latter method is an insurance against living too long and outliving your savings, as no one knows how long they are going to live, but they will know how much money they are going to have. In other words, you move the risk from you to the insurance company.
Depending upon where you live in the world, investing in an annuity can bring huge tax advantages as tax on such investments may be deferred while the capital sum continues to grow. As a consequence, many people use such a scheme to provide for their retirement. It can also be advantageous to anyone who has fallen behind on their retirement provision for in any case reason, as they can load money into the scheme and catch up, while enjoying the tax break. However, not all countries are the same, and it is advisable to consult with your financial adviser on this point.
The annuity advantage obtainable provides for a obtain, cash-high retirement and financial security for the annuitant and his loved ones. With the different annuity options and the possible tax advantages, annuities have made a sound investment for people living all over the world.