Insurance Company Annuities: An Ideal Retirement Plan
Insurance company annuities are a type of contract in which you pay an amount of money to the company and the company in return guarantees to give you a monthly income. Annuities are considered as an ideal retirement plan. Annuities provided by various insurance companies can be categorized in to the following:
Fixed or variable: The fixed rate annuity provides you with a fixed rate of interest for the first year. Then the rate drops and then it is managed annually. However in variable annuity, the insurance company guarantees a minimum payment at the end of the accumulation stage and the remaining income installments may vary in accordance with the performance of the investor's portfolio. Lets discuss these options briefly as follows. Immediate or deferred: Those who are close to retirement choose this option because it provides an immediate income to the people. Your income may last for your entire life or even as long as you and your spouse live! Whereas, a deferred annuity refers to the one plan that shelters the tax. This means your gains are not taxed until they are withdrawn. Cash refund or joint and survivor: Cash refund property gives the advantage of getting back your accumulated money in cash after retirement. The joint and survivor annuity is for the purpose of those who wish to get income not only for their life-time but for their spouse's entire life too. Multi-payment or single pay: At the time of payment for your annuity, you are provided with flexible options. Either you can pay the amount in a single payment or choose the one that helps you to do the payment in installments. There are many benefits that are provided by annuities offered by various insurance companies. The best part of this is that it is quite simple to start your annuity contract. All you need to do is to fill up application and a signed cheque, your contract takes off smoothly from thereon. There is nothing you need to worry because you are not going to receive a 1099 for income earned under your annuity contract. The money that is inside your annuity comprises two things the principal amount and the earnings. It is considered that you have deposited the after-tax dollars only, so you are taxed only on your earnings. Another benefit is that the flexibility provided in the payment options is really good. With this information, feel confident to choose which annuity to opt for because you now know that it is considered as an ideal investment for estate planning. |
