Variable annuities offer the choice of an income for a lifetime and incomes of increasing your lump sum of money through investments in stocks and bonds. Variable annuities are primarily sold through insurance companies these types of annuities offer an immediate or deferred payout. A variable annuity provides individuals with a large sum of money a tax-deferred monthly payment plan.
The basics of how a fixed annuity works is that you give an insurance company a sum of money and in exchange they create an annuity contract which states how you would be paid that money back in monthly increments. A variable annuity essentially is contract stating that you are to receive monthly increments on the sum of money invested as a well tax deferral on all earning received, the ability to name beneficiaries to receive any remaining balance upon your death, annuitization, or the ability to receive payments for rest of your life based on your life’s expectancy, and a guarantee provided in the insurance component of the contract.
The main selling point of a variable annuity is that all underlying investments that are grown are tax-deferred, similar to an IRA. This means that all appreciation, interest and financial gain from the annuity is not taxed until the money is withdrawn. This allows the money to create a longer wealth sustaining financial stream in your life. The fear of receiving and quickly spending a lump sum of money received through inheritance, an investment, a winning, or a law suit can be erased through the use of a variable annuity contract. There is a guarantee, based on the insurance aspect of the contract that the full principal of the invested sum will be paid out to the heirs upon the death of the account holder no matter what the market value is at the time of the individual’s death.
The benefits of investing in a variable annuity contract or plan can be easily spelled out for you by your insurance company. Select a trustworthy, dependable insurance company to invest your financial sum of money into. A variable annuity plan will provide you with a lifetime of monthly income payments based on the personalized contract agreed upon by you. You insurance company will provide you with a variable annuity that will provide you with a monthly income as well as an increase in your investment and the security and peace of mind knowing that your money is safe.
You should review the complete plan, considering such factors as the guaranteed interest rate, the surrender charges, and the administrative and maintenance fees. A high interest rate during the first year is not always the better choice. This is especially true if the interest rates drop to a low minimum rate the next year with high surrender charges and additional fees.
BuyAPension.com was formed in 2008 as an annuity company to serve the ever-expanding retirement income needs of Baby Boomers and their parents. Planning for income in retirement presents many challenges and investment products are often complex, therefore, it is our goal to provide simple solutions and explain these solutions to our clients in a straightforward, understandable fashion.