A retirement annuity can be a great addition to any investment portfolio especially if you are seeking to diversify your investments. But what makes it so special? If you want to retire with guaranteed source of income minus the risks, then a retirement annuity is the right insurance product to purchase. But don't just go off purchasing an annuity just yet. Approach any reputable insurance company such as Puritan Financial Group and they will tell you that there are different types of annuities available. If you don't have a working knowledge of what these types are, just the act of choosing which product to get can be confusing. To help you choose the best type of annuity based on your needs, read on.
How Annuities Work
Annuities will begin to generate income as soon as you put in your initial investment or the first investment in consecutive payments. You can receive a lump-sum payout on a set date, or you can opt for a set of payouts on a series of dates. Other than the lump-sum payout option, you can also opt to get your annuity payouts on a monthly, quarterly or annual basis. Payouts can also be set to be received over the years as you live, or you can set it for every number of years. The amount of money that you can possibly receive will be dependent on different factors such as the total of your investments in the annuity, your payment duration, as well as the performance of the assets where your annuity payments were invested (applicable only for variable annuity).
Deferred Annuities and Immediate Annuities
The two common types of annuities are deferred and immediate. A deferred annuity pretty much works like a certificate of time deposit. Your money is tied to a fixed period of time until the annuity matures. With this type of annuity, you may not withdraw from the annuity until you retire. This differs from an immediate annuity as from the name itself, you can expect to be paid shortly after you make your first investment. But perhaps the easiest way to distinguish one from the other is to remember that an immediate annuity pays out money while a deferred annuity amasses it for later distribution.
There are also fixed or variable immediate and deferred annuities. A fixed annuity will come up with a fixed set and amount of payouts to the investor, while an immediate annuity will base the payouts on the performance of the assets where the investment was made.
Knowing and being able to differentiate one type of annuity from the other can help you determine which type of annuity will best suit your needs. Remember that there are a lot of dishonest sales agents out there who may persuade you with insurance products you don't need. To be sure, do your own research and only purchase from a reputable and stable company. You can start by considering companies like Puritan Financial Group.
How Annuities Work
Annuities will begin to generate income as soon as you put in your initial investment or the first investment in consecutive payments. You can receive a lump-sum payout on a set date, or you can opt for a set of payouts on a series of dates. Other than the lump-sum payout option, you can also opt to get your annuity payouts on a monthly, quarterly or annual basis. Payouts can also be set to be received over the years as you live, or you can set it for every number of years. The amount of money that you can possibly receive will be dependent on different factors such as the total of your investments in the annuity, your payment duration, as well as the performance of the assets where your annuity payments were invested (applicable only for variable annuity).
Deferred Annuities and Immediate Annuities
The two common types of annuities are deferred and immediate. A deferred annuity pretty much works like a certificate of time deposit. Your money is tied to a fixed period of time until the annuity matures. With this type of annuity, you may not withdraw from the annuity until you retire. This differs from an immediate annuity as from the name itself, you can expect to be paid shortly after you make your first investment. But perhaps the easiest way to distinguish one from the other is to remember that an immediate annuity pays out money while a deferred annuity amasses it for later distribution.
There are also fixed or variable immediate and deferred annuities. A fixed annuity will come up with a fixed set and amount of payouts to the investor, while an immediate annuity will base the payouts on the performance of the assets where the investment was made.
Knowing and being able to differentiate one type of annuity from the other can help you determine which type of annuity will best suit your needs. Remember that there are a lot of dishonest sales agents out there who may persuade you with insurance products you don't need. To be sure, do your own research and only purchase from a reputable and stable company. You can start by considering companies like Puritan Financial Group.
About the Author:
Puritan Financial Group provides life insurance for seniors, as well as retirement annuity products that can help them build bigger and stronger nest eggs. For more information on how Puritan Financial Group can help you, please visit our website at http://www.puritanlife.com/products/annuities.
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