Annuities provide protection against loss of income arising out of excessive longevity. In other words, they provide a hedge against living too long.
An immediate annuity will start to pay out soon after the contract is setup whereas a deferred annuity will allow a younger person to accumulate funds within the annuity over a period of time.
The question is do you need an annuity, or would another financial instrument be more suitable?
Are you trying to fund a lifestyle in retirement? If so, how much "After Tax" money do you need to maintin your desired lifestyle? How many years do you have before you need income? How many years of income would you like to have?
This can only be determined by examining your present financial situation to where you'd like to be down the road. I recommend working with a professional financial advisor to help you visualize the various way to accomplish your goals.
The market for annuities is composed of two broad categories of individuals: those who have already accumulated an estate either through inheritance or by their own personal efforts and those who are seeking to accumulate an estate.
The annuity can be an attractive savings medium for the person who has not yet accumulated an estate but wants to achieve financial independence in old age. Professional people find annuities especially attractive for that purpose. The same is true of athletes, entertainers, and others who enjoy a very large income for a limited period of time. Annuities can be an appropriate investment because they can be purchased through flexible periodic premiums or through single-premium deposits as the annuitant comes into possession of large sums.
Do you have an advisor that you currently work with for financial planning? He or she should be able to direct you to the appropriate insurance company that offers competitive annuity contracts. Find out if the advisor is a broker (meaning they can bring many different insurance companies to the table for your consideration) If not, then they may be only to show you one option that may not be the best fit for you.
Ask for ratings of the insurance companies. Only work with A-rated companies when it comes to financial solvency. It won't do you any good to buy a great annuity at a low price if the insurance company goes bankrupt in 10 years! Also, be sure to compare the expense charges and guarantees. They may vary, and may be a deciding factor.
Bottom line--work with a financial professional you feel comfortable with, but don't hesitate to question why they're recommending a particular product.
An immediate annuity will start to pay out soon after the contract is setup whereas a deferred annuity will allow a younger person to accumulate funds within the annuity over a period of time.
The question is do you need an annuity, or would another financial instrument be more suitable?
Are you trying to fund a lifestyle in retirement? If so, how much "After Tax" money do you need to maintin your desired lifestyle? How many years do you have before you need income? How many years of income would you like to have?
This can only be determined by examining your present financial situation to where you'd like to be down the road. I recommend working with a professional financial advisor to help you visualize the various way to accomplish your goals.
The market for annuities is composed of two broad categories of individuals: those who have already accumulated an estate either through inheritance or by their own personal efforts and those who are seeking to accumulate an estate.
The annuity can be an attractive savings medium for the person who has not yet accumulated an estate but wants to achieve financial independence in old age. Professional people find annuities especially attractive for that purpose. The same is true of athletes, entertainers, and others who enjoy a very large income for a limited period of time. Annuities can be an appropriate investment because they can be purchased through flexible periodic premiums or through single-premium deposits as the annuitant comes into possession of large sums.
Do you have an advisor that you currently work with for financial planning? He or she should be able to direct you to the appropriate insurance company that offers competitive annuity contracts. Find out if the advisor is a broker (meaning they can bring many different insurance companies to the table for your consideration) If not, then they may be only to show you one option that may not be the best fit for you.
Ask for ratings of the insurance companies. Only work with A-rated companies when it comes to financial solvency. It won't do you any good to buy a great annuity at a low price if the insurance company goes bankrupt in 10 years! Also, be sure to compare the expense charges and guarantees. They may vary, and may be a deciding factor.
Bottom line--work with a financial professional you feel comfortable with, but don't hesitate to question why they're recommending a particular product.
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