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Annuities
Annuities are a distinct financial product that offers buyers a guaranteed future income stream in exchange for premium payments made today. Various types of annuities exist, each offering different benefits and payment structures.
Call Now 312.945.0361
Annuities
Annuities are a distinct financial product that offers buyers a guaranteed future income stream in exchange for premium payments made today. Various types of annuities exist, each offering different benefits and payment structures.
What are Annuities?
Annuities are a contract between you and an insurance company. It’s an insurance products designed to help you save a substantial amount of money by offering a means to reduce taxes and secure a consistent income stream in the future.
Annuities are an excellent way to protect against the risk of outliving your retirement savings. Without this safeguard, you could face a significant decline in your standard of living during your later years.
How do Annuities work?
When you purchase an annuity, you can either make a one-time lump-sum payment or contribute over a period of time in exchange for future income. The annuity grows tax-deferred until you start withdrawing funds or begin receiving payments.
When it’s time to access your annuity income, you can choose between regular, fixed payments or withdrawing the entire amount in a lump sum.
Immediate Annuity
These plans provide benefits as soon as you invest. By making a lump-sum payment, your annuity payout begins immediately. You can choose an annuity that lasts for your entire lifetime or for a set period, making this plan ideal for those who are retired or nearing retirement.
Variable Annuity
These plans offer different payout options during the payment phase. The insurance company invests your initial amount into a portfolio of mutual funds that you select. Your payouts will depend on how well these funds perform in the market. If the funds do well, you’ll see higher returns, and if they don’t, your returns will be lower.
Due to the potential for fluctuating returns, this plan is best suited for investors with a higher risk tolerance.
Fixed Annuity
In this type of annuity plan, you receive a steady payout throughout the payment period. The plan primarily invests in fixed-income instruments, making it a relatively conservative option.
While the principal amount may see minimal growth during the accumulation phase, this plan is often favored by risk-averse investors for its guaranteed income after retirement.
Indexed Annuity
With this plan, the annuity payout increases by 2% to 5% annually to help offset inflation. While it may not be tied directly to the actual inflation rate, it does help manage rising expenses over time.
Learn more
Call us today. One of our Complete Coverage agents will be happy to walk you through each plan.