Annuities are retirement saving tools issued by the life insurance companies. They are formulated for accumulating the funds and also provide a steady flow of income after retirement. Based on the financial objective, you can choose between the fixed and the variable annuities. In the fixed ones, you are given a guarantee of a minimum return. For the income payments, you can opt either for a lump sum payment or for equal payments. The beneficiaries can receive the principal amount paid by you reduced by the withdrawals made by you. A variable one has a lot of growth opportunities but its rates fluctuate.
For variable annuities, investments are made in the mutual funds and the stock market. You can choose between the conservative and the aggressive ones and this way, the investment is diversified. Here, you can also make your decision regarding how you want to receive your income, whether as fixed income or as variable income, which is based on investment performance or as a lump sum payment. They are more complex than the fixed ones and they are subject to market risks. So, before investing in them, it is better to know their fees, features, and the benefits. For more information, log onto hibenjamin.com.
Secondary market annuities
The rate of return of these annuities is higher than the traditional annuity, an indexed annuity, or a certificate of deposit. These are paid to the investors from the insurance companies whether you are the actual owner or not. You must have heard of companies that offer to buy the annuities for a lump sum payment. Some are awarded lifelong payment or for some years of life due to the personal injury settlement. When the client resells the annuity, it creates a secondary market for the annuities.
Annuities are sold by the life insurance companies and they are the oldest and the safest institutions. The genuine companies are obligated to make payments to the original owners. These payments are guaranteed and steady and this gives a lot of easy and comfort to the people and they can sleep properly at night. The secondary market gives a higher yield to the investors. The good thing about them is that you can select the duration, yield, the insurance company, and date of beginning of payment. These contracts keep on changing on a daily basis as there are many investors.
Single and premium annuities
Premium payment can be done in two different ways. The payment can be either a single lump sum or in multiple payments. Single and flexible premium are the terms used to describe them. The single premiums are purchased using the single deposit. The contract can be either immediate or deferred. A flexible annuity premium can be purchased with multiple monies. This account is a deferred policy and the payments are made in a long time. In the flexible one, the investors look forward to generating savings for a long time period.