An annuity account will help you get money when retirement comes. An annuity may involve many different parties and come in different kinds. Just like other investment plans, they also have their share of advantages and disadvantages.
If saving for retirement or just a medium to long term plan, an annuity may be the correct choice for you. It is quite important to research annuities so you will make the right decision. Here are certain basic details that you should know about annuities:
Knowing an annuity account
An annuity account is an investment contract between you and the investment company, generally it is an insurance company, wherein the latter periodically pays the annuitant a specific sum of money beginning at a particular period in time and for a specified span of time. An annuity lead is how you will be reached. As soon as you sign a contract, the company gets your money. You will begin to get payments beginning on the determined date for a number of years or perpetually. Annuities are a good idea for those getting ready to retire.
The concerned parties
The insurance company, the payor, and owner of the contract, the annuitant, and the beneficiary, are the parties of an annuity contract. The insurance company itself has the responsibility of contracting the agreement, as well as paying the returns to the owner of the annuity. To invest with the insurance company, the owner-payor supplies the funds. The annuitant is the recipient of the returns, while the beneficiary receives the returns in case the annuitant passes away during the course of the contract or depending on the stipulation of the contract. Generally, the owner-payer is also the annuitant.
Several types of an Annuity
There are various kinds of annuities. Annuities can be immediate or deferred, fixed or variable annuities, fixed period or lifetime annuities and two-life annuities.
*It can be deferred or it can be immediate. Annuities can be identified based on when the payouts are made. With immediate annuities, you pay the investment amount in a lump sum and start receiving returns the year after. In case of deferred annuities you start receiving returns after a stipulated number of years even if you invest lump sum or on installment basis. The accumulation period refers to the years between payment and returns.
*Fixed or varied. Annuities may also fixed or variable. The accounts which offer you a fixed sum of returns every year during the fixed currency of the deposit period are technically termed as fixed annuities. Variable annuities fluctuate depending on the given vehicles’ performances.
*The lifetime fixed period. Your annuity account can be for a fixed period or a lifetime as well. With a fixed period annuity, you will receive your returns within a stipulated number of years. For instance, you may prefer an annuity account which allows you to receive a certain amount of money every year starting at age 60 and continuing through age 80. The 20-year fixed contract means that payments are fixed for that period of time. Your beneficiaries will receive the specified amount until the contract ends, if the unfortunate happens before the term ends. You may also choose a lifetime annuity which provides yearly returns beginning on a designated date. If your life ends during the repayment period, your beneficiaries will find themselves unable to attain the specified amount.
*Two-life annuity applicable. In a two-life annuity, a spouse continues to receive the specified amount after the annuitant dies. Payments will continue until the spouse also dies.
Advantages of Annuities
One of the great things about an annuity is that it provides continuous income for those who are planning for retirement and for those who have medium- to long-term plans. Taxes are also deferred with annuities, unlike other investments. You only begin paying taxes after you’ve begun to receive your returns. Due to the combination of savings and insurance, annuities can be very wise investments for you to make. This will allow you to save for the future while also provide life insurance.
Disadvantages of Annuities
While annuities offer attractive benefits, they also have some drawbacks you might want to consider. First and the foremost, annuities do not enhance your investment, particularly if you choose fixed annuities. Unlike other investment vehicles, annuities offer fixed or limited returns, unless you opt for variable annuities. You cannot get the money anytime you want as annuities are inflexible. If you choose to terminate the contract early, you would get a lower amount than what you invested. There will also be penalties and taxes to pay.
All investments have their benefits and drawbacks. The wisest way to choose an investment is to look at your needs and understand the risks that are present. If you believe your needs are in the long-term and you definitely want returns, an annuity may be the best answer for you.
Image from page 8 of “Trigonometria” (1658)
Image by Internet Archive Book Images
Year: 1658 (1650s)
Authors: Newton, J.
Contributing Library: The Computer Museum Archive
Digitizing Sponsor: Gordon Bell
Click here to view book online to see this illustration in context in a browseable online version of this book.
Text Appearing Before Image:
of Money and Annuities, at any Rate or Time propounded- The other, the ufe or application of the Canon of ArtificiallSines, Tangents and Logarithms, in the moft eafie and compendious wayes of Refolution of all TRIANGLES,whether PLAIN or S PHERICAL. TheoneCompofed,the other Tranflated, from the LatindCopie written by HENRT CjELLlBKAND, Sometime Profeflor of ASTRONOMT in Grejham-ColkdgeLondon, A Table of Log arithms to 100.000, thereto annexed.With the A rtificial Sines and T a n g e n t s, to the hundred part of every Degree; and the three firft Degrees to a thoufand parts. By John Newton, ^M. <±J. L 0 3CtD 0 3%:Printed by R.&W. Ley bourn, and are to be fold(jeorge Hnrloc at Magnus Church corner, fofhuab j^ir.on at the Kings Arms, and Thomas Pierrepont^ at the Sun in Pauls Church-yard^ and *William Ftfher at the Vo&ern neer Tower-HUH. c lviii, Digitized by the Internet Archive in 2012 with funding from Gordon Bell archive.org/details/trigonometriaOOnewt
Text Appearing After Image:
TO THE MOST ILLUSTRIOUS LORD. THE L O R D Richard Cromwel, Mji Lord, ■ Ommon Experience , and thedecay of Trade, do fufficientlydemonftratehowufeful andne-ceflary the Art of Navigation is,both in refpe£t of the fafety, andof the enrichment of the Com-mon-wealth j to the knowledgewhereof it is impoffible that menfhouldattaine in any competent meafure, unlefle theyfirft learn the Do£trine of Plain and Spherical Trian-gles ,• and there being but fmall encouragement hi-therto given, to thofe that have , and doe (till beftowtheir pains in this, for the publick good, we are notto wonder, if the mod of our Sea-men, be not fo wellskilled as they fhould in the Art they profefle; Butyour Honour having taken my Mother the Ancientand Famous Univerfity of Oxford under your protecti-on, and given a general countenance to Learning, I A 2 amtrigonometria00newt
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