An Overview Of Annuity- Types, Facts, And Service Providers
An overview of annuity- Types, facts, and service providers
An annuity is an insurance product through which you obtain regular disbursements after paying a series of payments for a specified time. Many use it as a part of their retirement strategy for a guaranteed retirement income. If you have also decided to put some of your savings into an annuity to secure your life post-retirement, you should know the ins and outs of this insurance product for rewarding results. This article intends to provide you with useful information about annuities, annuity rates, its types, and more.
How does an annuity work?
- You make an investment in the annuity, and then it makes monthly, quarterly, or annually payments back to you.
- The payment amount you receive for the specified number of years depends on a number of factors, including the duration of the payment period, your age, gender, and the current annuity rate.
- It is up to you to choose payments either for a set number of years or for the rest of your life.
What are the different types of annuities?
The following are the five different types of annuities:
- Fixed annuities- As the name suggests, these annuities have fixed rates.
What are the mistakes to avoid while buying annuities?
- Not comparing annuity rates- Some people ignore the importance of comparing annuity rates. One must compare annuity rates offered by different providers and should keep an eye on the yearly changes in rates, such as comparing annuity rates of 2017 with the current year and the likes.
- Buying a low-rated carrier- Don’t ever go for a substandard company selling annuities only because it is offering better benefits.
- Not doing the homework right- Rather than signing an annuity contract in a hurry, you should take the time and put in all efforts to make an informed decision.
- Taking extra withdrawals- There are certain annuities that allow you extra withdrawals. However, doing so can slash the guaranteed value or the retirement annuity rates.
What are the annuity facts every retiree should know?
- Annuities can serve as smart tax saving tools, which help avoid big tax bills in retirement.
- Annuity payments are likely to rise with an increase in interest rates. Therefore, your annuity payments would rise in the future if there is a rise in the interest rate.
- Annuity commissions and fees can be high, especially, with indexed and variable annuities.
- Annuity payments can be fixed or might increase over time.
- Annuities bought from established and reliable annuity providers are strong in comparison to those sold by an agent.
- An immediate annuity begins paying income immediately but not right away. It starts paying you income one annuity period after purchase, which can be 30 days to one year.
- Deferred annuities provide lifetime income along with tax-advantaged saving.
- Fixed annuities provide a guaranteed minimum rate of return and a fixed series of payments.
- A variable annuity carries an investment risk, as its rate of return is based on the performance of subaccounts.
Which are the top annuity rates service providers in the country?
Some of the top annuity rates service providers in the country are:
- American Internation Group
- Minnesota Life
- American National Life Insurance
- North American Company for Life and Health
- Midland National
- USAA
- Penn Mutual
- MetLife