Annuities are a great way to help you reach financial independence, as they reduce your current taxes, give additional protection to beneficiaries, help your money grow through tax deferral, and give you a steady income throughout your life. Basically, an annuity is an agreement that you’ll receive fixed payments on an investment over a specific amount of time, or throughout your life.
Deferred annuities is when you defer receiving a payout until a point in the future to allow the annuity to accumulate a higher cash value, which will help you put aside money for your long-term savings goals.
Deferred annuities include both fixed and variable annuities. A fixed annuity comes with guaranteed interest rates, meaning you’re protected from any volatility in the market. On the other hand, a variable annuity is more affected by a fluctuating market and can lose its value, but you’re allowed to create your own investment strategy
Deferred annuities come with benefits like family protection, a variety of strategic investment tools, income choices for retirement, and your choice in investments.
Immediate annuity options:
- Life – Life only annuities come with the highest risk, but also the highest income. You receive payments for your entire life, but they could be cut off if you die.
- Joint – With joint annuities, two people under one policy receive fixed monthly payments, which continue until both parties die. Sometimes, the payments decrease after one person dies, but not always.
- Life Income With Certain Period – These annuities guarantee that you’ll receive payments for your entire life, and if you die before a specified period is over, your beneficiaries will still receive payments until the period ends.
- Life With Installment Refund – With these annuities, you will receive payments for your entire life, and your beneficiary will continue to receive them after your death until your entire principal has been paid.