What You Need To Know Before Choosing A Variable Annuity
This article will give you a quick rundown of the most important things to think about when you're looking for a variable annuity as well as how to decide which annuity will best meet your needs.
As with any annuity insurance, a variable annuity is a contractual agreement between an investor and an insurance company. The investor provides an upfront payment - either one time, or instalments.
The investor's returns come in the form of payments which are comprised of a percentage of the principal along with the interest earned by this principal, generally as ongoing payments. Annuity payments may be made for a certain period as spelled out in the annuity agreement or for the life of the investor.
With a variable annuity, you decide how to invest the money that you have placed with the insurance company. There will be a list of pre selected funds ranging from highly aggressive stocks to conservative bonds and you choose how you wish to invest.
A variable annuity gives the investor the best of both worlds - they may invest outside of the annuity itself but at the same time, they receive the benefits of tax deferral typical of annuities.
Another option usually provided with variable annuities is the choice of converting to a fixed annuity. Investors may decide to invest their payments in bonds and stocks; or if they would rather not expose themselves to the risks posed by market fluctuations, they can choose a fixed interest rate instead.
A portion of your annuity payments can also be allocated to any account of your choice which provides a fixed interest rate. Your investment can be thus shifted without having to pay taxes on these gains until such a time as you actually receive a payment. Once you begin receiving payments, you may choose to receive them as regular ongoing payments or as a lump sum.
Generally speaking, investors do very well with a variable annuity invested in the major US markets. Though there is always some risk involved with investing, most economists and financial experts regard stocks as a solid investment which provides flexibility and tax deferrals.
Before deciding on a variable annuity, investors do need to keep in mind that there are costs associated with these annuities which can be upwards of 3%. You'll want to make sure that you understand both the costs and benefits before choosing variable annuities as a way to invest. - 23199
As with any annuity insurance, a variable annuity is a contractual agreement between an investor and an insurance company. The investor provides an upfront payment - either one time, or instalments.
The investor's returns come in the form of payments which are comprised of a percentage of the principal along with the interest earned by this principal, generally as ongoing payments. Annuity payments may be made for a certain period as spelled out in the annuity agreement or for the life of the investor.
With a variable annuity, you decide how to invest the money that you have placed with the insurance company. There will be a list of pre selected funds ranging from highly aggressive stocks to conservative bonds and you choose how you wish to invest.
A variable annuity gives the investor the best of both worlds - they may invest outside of the annuity itself but at the same time, they receive the benefits of tax deferral typical of annuities.
Another option usually provided with variable annuities is the choice of converting to a fixed annuity. Investors may decide to invest their payments in bonds and stocks; or if they would rather not expose themselves to the risks posed by market fluctuations, they can choose a fixed interest rate instead.
A portion of your annuity payments can also be allocated to any account of your choice which provides a fixed interest rate. Your investment can be thus shifted without having to pay taxes on these gains until such a time as you actually receive a payment. Once you begin receiving payments, you may choose to receive them as regular ongoing payments or as a lump sum.
Generally speaking, investors do very well with a variable annuity invested in the major US markets. Though there is always some risk involved with investing, most economists and financial experts regard stocks as a solid investment which provides flexibility and tax deferrals.
Before deciding on a variable annuity, investors do need to keep in mind that there are costs associated with these annuities which can be upwards of 3%. You'll want to make sure that you understand both the costs and benefits before choosing variable annuities as a way to invest. - 23199
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posted by X - Men @ 6:16 AM
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