Annuity Insurance for Estate Planning
What is an annuity?
Annuities are financial products that help create predictable income once you stop earning a paycheck. In general, an annuity is a contract between you and an insurance company in which you make a lump sum payment or series of payments and, in return, you receive a regular income stream at some point in the future. Annuities come in many forms, but generally they fall into two main categories: annuities that help you save for retirement and annuities that provide guaranteed income in retirement.
Types of annuities…
Fixed Annuity - A fixed annuity guarantees payment of a set amount for the term of the agreement.
Indexed Annuity - An indexed (equity-indexed or fixed-indexed) annuity pays a rate of interest based on a particular market index, such as the S&P 500. Indexed annuities give buyers an opportunity to benefit when the financial markets perform well. One of the best features of Indexed Annuities is that they only participate in the GAINS of the market and NONE of the loses.
Annuity considerations…
How do you want to pay for the annuity: Single Premium vs. Multiple Premiums?
When do you want to receive payments: Immediate vs Deferred?
How long will your annuity payments last: Lifetime vs Fixed Period?
Create Future Income With an Annuity
Annuities are among the only financial products available that can provide a guaranteed income for life. Each type of annuity has different payment and payout options and levels of risk.
Annuity FAQs
Annuities can be a little confusing because they have features of investment products and insurance products. Here are answers to frequent questions to help you understand more about how they work.
What Is an Annuity?
Often mistaken for investments, an annuity, by definition, is a financial product acquired through a contract with an insurance company. There are many different annuities available to help you create a predictable lifetime income. Some are very low risk, while others can be tied to the performance of a market index like the Nasdaq 100. Annuity contracts like these have a guaranteed minimum return, so they are less risky than investing in the stock market.
What Is an Annuity Account?
In addition to saving money for your retirement through accounts like a 401(k) or Individual Retirement Account (IRA), you can also save long term and get tax benefits with an annuity account. A variable annuity allows you to invest funds into other market-based accounts, and a fixed-indexed annuity will grow at the same rate over time.
What Is Annuity Insurance?
As previously stated, an annuity is a contract with an insurance company, so it is typically referred to as such rather than as annuity insurance. However, an annuity is insurance from outliving your assets and, like life insurance, can include death benefits.
Learn More About the Many Types of Annuities From Estate Planning Inc
Annuities are complex financial products, and there are several decisions you will need to make if you use them in your estate planning strategy. Estate Planning Inc can guide you to the right annuity for your financial situation and risk tolerance. Contact us today to speak with an expert.
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