Annuities
In simple terms, an Annuity is a future stream of payments provided by an insurance company in exchange for a lump sum deposit. Annuities can be excellent sources of income in retirement, or for other objectives when a guaranteed income is important.
An Annuity can be thought of much like a pension. When you give your deposit to an insurance company, in return they will promise you a predetermined periodic payment over an agreed upon time frame. There are various types of Annuities such as Life Annuities, Joint-Life Annuities, Term Certain Annuities and Variable Annuities.
Life Annuities
A Life Annuity is an Annuity which is payable for the duration of your life, regardless of how long you live. The Annuity payments guaranteed by the insurance carrier will be calculated based on your age, life expectancy, and the size of your deposit. The payments from a Life Annuity end upon your death. Life Annuities are also available on multiple lives. This is know as a Joint Life Annuity. The payments from a Joint Life Annuity are guaranteed until the second death of the lives insured. A Joint Life Annuity can be ideal for providing financial security to a couple in retirement.
Term Certain Annuities
A Term Certain Annuity provides a stream of payments which are guaranteed over a certain period of time. 5, 10 & 20 Year Annuities are quite common. At the end of the Term, the payments end. If you were to die before the end of the Term, the Annuity payments would continue to your beneficiary for the remainder of the Term.
Variable Annuities
Variable Annuities provide the features of a traditional Annuity but with performance which is tied to the stock market. The resulting Annuity payment will be dependent on the performance of the underlying investments.
To learn more about Annuities and how they can provide a guaranteed income, please contact us.
