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Benefits for Fixed Annuities as Annuity for Retirement

As more United States citizens become more knowledgeable about the use of annuities for retirement, the insurance companies are increasingly getting more requests from retirees who desire to open these accounts and are looking for better annuity options to invest in. Surprisingly, fixed annuities seem to have become very popular, with increase in the sales of fixed annuities rising by almost fifty percent every two years.

Benefits of Fixed Annuities

AnnuityForRetirementThese fixed annuities seem to have become very popular due to a number of reasons with the most important being the guaranteed level of fixed payout over a period of time. With fixed annuities, retirees may not be worried in any way as the payouts come in steadily every month, every quarter or annually in line with the terms of the agreement. Investors also know exactly what to expect as payout every period and plan their expenses according to the expected amount. In contrast, payouts from variable annuities fluctuate on a periodic basis due to market swings. It could be higher or lower than the original amount that may be guaranteed at every payout time.

Also, fixed annuities generally have lower fees attached to them as opposed to other types of annuities. This is due to the fact that they are at the lowest risk levels and the insurance companies can effectively plan for payout to fixed annuity holders. The effort required for processing the payouts is minimal and these companies can even afford to place standing orders for payouts without any major manual intervention.

However, for variable annuities, the payout rate changes every period. Even if it is automatically computed by the financial software, some level of human intervention needs to be included to get the correct payouts to deserving investors.

In addition, some fixed annuities offer protection for inflation, by including the Cost of Living Adjustment (COLA) benefit every few years. This COLA makes it possible for your fixed payout to increase in line with inflation, though this will be adjusted based on your needs assessment document which was part of the original contract signed.

Generally, it has been proven that fixed annuities for retirement are one of the best investment options after the middle-ages. To get the best value from your annuity plan, it is very important to compare rates from different providers across the country. You can use several parameter including management fees, interest income levels, financial rating of the company and a host of other factors. We have provided below links that you can use for comparing the rates offered by different leading annuity providers.

To get started, enter your zip code on the top of this page, and then answer some basic questions. This will help you to compare annuity plans from multiple providers for FREE to determine your highest eligible rate. It is important to provide accurate questions to these answers as our pool of providers will provide you with different rates depending on your individual circumstance and situation.

Annuity For Retirement Glossary

As you look forward to comfortable years in retirement, it is important that you have a good grasp of terms associated with annuities for retirement purposes. Get a deep understanding of these terms and compare rates from different annuity providers using our comparison tool.

•             1035 Exchange: this is the term used to describe a transfer of annuity from one insurance company to another. Investors often use this exchange in order to get a plan that works best for their retirement needs. It is usually tax-free but to successfully change plans, the contact owner and contract terms in the old and new contract must be the same. However, surrender fees might be charged if the investor makes an exchange before the date initially agreed upon in the contract. It is usually a percentage of the principal amount deposited.

•             401K: is a retirement savings plan that is sponsored by the employer. This plan allows the employees to keep back a part of their income to be invested in an annuity plan of their choice before their tax is deducted.

•             Accumulation Phase: is a time-period in which an annuity owner can add more money to his principal investment if he desires.

•             Annuitant: is the term used to describe an individual who invests in an annuity plan and makes withdrawals from it according to the terms of the annuity contract.

•             Annuity: is a term used to describe the payments that are made to an annuitant under an annuity plan.

•             Annuitization: is a term used to describe the conversion of the value of an annuitant plan into an income stream that can be paid out periodically or as a lump sum after a period of time.

•             Annuity Contract: this refers to a legal document that contains the terms and conditions of an annuity plan which is binding on both the insurance company and the annuitant.

•             Beneficiary: is an individual that benefits from an annuity plan in the eventuality of the death of the original annuitant. It could be a family member or a loved one.

•             Certificate of Deposit (CD): Is a certificate that is usually issued by banks when you deposit a principal sum of money. The principal amount with interest can be withdrawn after a specified period of time.

•             Contract Owner: refers to an individual or entity that buys an annuity plan and funds it.

•             Contract Termination: This is a term that refers to the termination of an annuity plan in the eventuality of the death of the annuitant.

•             Deferred Annuity: refers to a type of annuity that does not payout immediately but takes a longer period of time before it is due for payment by the insurance company. The taxes are deferred until the annuitant makes a withdrawal.

•             Fixed Annuity:  refers to a type of annuity plan in which the rate of return is guaranteed. Fixed annuities can either be immediate or deferred.

•             Guaranteed Interest Rate: is the interest rate that is paid by an insurance company to an investor under the fixed annuity plan. This sum is not subject to market instabilities. It is usually between 3 -4%

•             Immediate Annuity: This refers to a type of fixed annuity in which the annuitant can immediately begin to make withdrawals after a short period of time, say one month.

•             Joint Annuitant: Refers to a person who is named alongside with the contract owner in an annuity plan. This person’s age, and other data are factored in when making calculations to determine payments in that particular annuity contract.

•             Payout Period: This refers to the time period during which an annuitant can receive payments under an annuity plan.

•             Surrender Charge: is a charge that is deducted when an annuitant decides to switch annuity plans before the originally agreed date as stipulated in the initial annuity contract.

•             Tax-Deferral: Describes a situation where monies invested into an annuity are not taxed until withdrawals are made after a period of time.

To get started, enter your zip code on the top of this page and then answer some basic questions. This will help you to compare annuities for retirement plans from multiple providers for FREE to determine your highest eligible rate. It is important to provide accurate questions to these answers as our pool of providers will provide you with different rates depending on your individual circumstance and situation.

Annuities for Retirement as Source of Income

Do you know that it is possible to earn a steady income even after retirement if you plan extremely well and manage your current funds and post retirement benefits effectively? This is very true if you place funds in an annuity for retirement plan. If you have invested heavily in such a plan, you may even qualify for a lifetime income whereby payouts will be sent to you either on a monthly, quarterly or annually basis.

It’s extremely amazing how only few of us that get to age 65 would be able to cater for our needs. If while working we do not have enough, there is a high possibility that we will have less than enough to live on in retirement. Annuities for retirement can help close this gap and ensure we have enough to live on after our working years.

Over the years, we have noticed increasing cases of losses arising from investments in stocks and bonds due to market recession. The life expectancy of the average American is increasing steadily as well. It is important to note that even retired persons that have lots of assets right now may not be adequately prepared for the years ahead. So how do you convert your assets to a monthly income that you never thought could be yours? Annuities for retirement serve as an excellent solution.

The market rates for annuities differ so much between insurers and states. A comparison of what you need to put down for a steady stream of income is also an important point to check out. You may decide to compare with other investment products. It would however be wise to consider how risky those investment products may be and the rest of mind that comes from the safety net provided by a retirement annuity.

A retirement annuity may provide you with an income opportunity that you may never outlive, giving you the opportunity to leave some inheritance in case death comes. It is also important that you thoroughly understand an annuity product and the performance guarantees that it offers before putting your money into it. While you plan to have an income that will outlive you, it is important to shield yourself from reduced payouts from the insurance companies or higher expenses to them.

To get started, enter your zip code on the top of this page, and then answer some basic questions. This will help you to compare annuity plans from multiple providers for FREE to determine your highest eligible rate. It is important to provide accurate questions to these answers as our pool of providers will provide you with different rates depending on your individual circumstance and situation.

Advantages of Annuities for Retirement Plans

Understanding annuities for retirement not only from the investment benefits it provides, but also from the tax advantage it offers will get you started on choosing an annuity type that guarantees a happy life when you stop receiving a steady income.

An annuity is basically a contractual agreement between an individual and an insurance company where the individual pays some money to the insurance company with the hope of receiving the amount in form of income in future. We all seek a secure lifestyle especially after retirement and choosing the right type of annuity is a good first step.  Depending on the lifestyle you live now and whether you seek a lifetime income or prefer the flexibility of withdrawing your saved amount before the agreed set time, there is an annuity plan to accommodate you. However, let’s explore the advantages.

Tax-deferred growth: Annuities are tax-deferred that is they are not taxed yearly or even for any reason except in the case of a withdrawal before maturity. Even when your investment is fully mature, the tax is extremely favorable because you will be taxed on the gains and not the principal. By the time you are ready to begin enjoying the benefits of your annuity plan, you would be in a lesser tax bracket which means you would be giving less to the government and having more financial gains to enjoy. One of the most interesting things about the annuity is the fact that there is no limit on the amount you can invest which means you can legally avoid tax on a large chunk of money.

Flexibility and adaptability: Some of the popular available annuity types today include Fixed Annuity, Equity-Indexed Annuity, Variable Annuity, Deferred Annuity, Immediate Annuity, Fixed Period Annuity and Lifetime Annuity. These various types of annuities offers you the flexibility of choosing how much money you put into it, the time limit say 16 -18 years when you hope to keep getting income from your annuity and the rate at which you want these incomes. It offers the privilege of choosing when you’d like to be paid, monthly, bi-annually, quarterly, annually or totally putting off receiving any amount from the investment until an appropriate time.

State Regulated: Unlike other investment vehicles which is independent of the state laws and generally guided by market forces, an annuity investment is state regulated. Hence it offers an excellent investment tool that is secure and should be considered by everyone.

Other subtle advantages an annuities for retirement include being passed on to a beneficiary in cases of death, being able to make your money/savings last as long as you live especially with increasing life expectancy or just being able to cash out in an emergency.

Enter your zip code on the top of this page and we will help you to compare annuity plans from multiple providers for FREE to determine your highest eligible rate. It is important to provide accurate questions to these answers as our pool of providers will provide you with different rates depending on your individual situation.

1035 Exchange As An Element Of Annuity For Retirement

You might be wondering, what does 1035 exchange mean? What is so unique about these sets of digits in relation to one making financial investments with an insurance company? Well, you are about to find out! Simply put, the digits 1035 refers to  section 1035 (a)- (d) of the  US IRS code regarding life insurance policies, endowment policies or annuity policies. Below is a statement of the code:

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Title 26, Subtitle A, Chapter 1, Sub chapter O, Part III, Section 1035

States with “no gain or no loss shall be recognized on the exchange” of a life insurance policy for another life insurance policy or endowment or annuity policy.

Under the exchange 1035 code, an investor may exchange or swap his previous life insurance policy, endowment policy or annuity policy for a completely new one and the best part of it is that you can make this change completely tax free! An investor can change any of the above named policies which he has previously to a completely new one- (most definitely a better one) within the same insurance company or to a completely new insurance company. There are some provisions and guidelines covering the implementation of the exchange 1035 policy namely:

•             The originator or annuitant of the old contract must also be the originator or annuitant of the new contract.

•             This exchange only applies to life insurance policies, endowment policies or annuity policies.

•             There must be an actual “exchange” of the old contract for the new one. The code also allows for the exchange of two or more old contracts for one new contract.

Why change policies you may ask? There are different reasons why making a 1035 exchange may be the best way to go as regards managing one’s financial investments. One major reason is that you can upgrade your investments to one that holds better advantages for you while avoiding tax implications. If the interest rates in your old contract are small compared to what is currently available in the market which may be more attractive, you may want to consider exchanging policies. The third reason is for wanting to change is that there may be new and better insurance products that offer more incentives or benefits than the previous one.

When one is nearing retirement, it may be a very good idea to review your previous annuity for retirement plans when one is nearing retirement, or when one swaps jobs. In spite of the fact that changing plans under the exchange code is advantageous, it may be time consuming as care has to be taken to ensure that the transfer is within the stipulated provisions. As with all other decisions regarding insurance policies and so on, it is advisable to seek professional help before taking decisions of this kind.

To get started, enter your zip code on the top of this page, and then answer some basic questions. This will help you to compare annuity for retirement plans from multiple providers for FREE to determine your highest eligible rate. It is important to provide accurate questions to these answers as our pool of providers will provide you with different rates depending on your individual circumstance and situation.

Pros And Cons Of Immediate Annuity Payouts

Most of you looking for a source of income during retirement are likely to be tempted by the attractive nature of annuity payouts. This should not be the case at all. Take enough time for soul searching to avoid any later regrets and misery. You cannot afford to fall into such a trap when actually you can keep off from the occurrence of the same. The truth however stands out that immediate annuities come along with great benefits that are very attractive indeed. Nonetheless, this should not be bait that will; lure you into making the biggest financial blunder in your lifetime.

Pros of Immediate Annuity payouts

The two main pros of immediate annuity payouts are a high payout and security of your investment.

High payout: There is a high likelihood of receiving a huge payout when you apply for an immediate payout. This will be determined by your current situation and the choices you make as an individual. For instance, 100,000 dollars worth of investment might earn you 700 dollars every month as payments in return. This figure is way beyond a return at 8 percent. Given the situation of the current market, it is just too good to be true; very appealing and attractive. Give this a second thought then finally say Yes or No.

Security: Although your income is not fully insured, the insurance company from which you purchased the annuity will provide the necessary backing. A sharp contrast exists if the current scenario is compared to what it used to be previously. However little it may seem, it is better than nothing. More so, the incoming payment is guaranteed irrespective of the unfavorable fluctuations in the stock market. You need not to worry because your income will still flow in unaffected. Your insurance company takes all risks and covers arising costs and expenses.

Cons of Immediate Annuity Payouts.

Having seen the benefits of immediate annuity payouts, you cannot downplay the flip side of this coin.

No access to capital: when you eventually make a choice to buy an immediate annuity, you have actually parted with your capital for good. Make no mistake of believing that the funds are at your disposal in case of an emergency. The contract cannot be reversed and so no cashing in is ever possible. Your income will flow in if the company continues operating .any attempts to alter the monthly payment or get more returns in case of an emergency will bear no fruit however much you try. You will be forced to resort to other sources to handle the emergency.

Your payout isn’t the return your money earns: whatever you get back in form of income is the sum of principal and interest. Though it might pass unnoticed, a large percentage of what you receive yearly actually comes from your investment and not the returns. Given a close look, it is clear that the returns are a paltry 3.2 per cent this is not worth taking the risk since the market might experience a drastic rise in interest rates even before your annuity matures.

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Top Five Disadvantages of Immediate Annuity

Everything has its upsides and downsides. Even immediate annuities, which are considered as low risk investments, can put you at a disadvantage.

For sure, the money you put in any kind of investment is valuable to you. It is something you have painstakingly earned and saved for many years. Most likely, you are relying on your investment to provide you a stable source of income after you have stopped working. You need it not only for your future but also for the future of the people you care about the most.

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Because you can’t afford to lose your hard-earned money, consider the following.

1. Immediate annuities give relatively low returns when compared with other investment tools. Because the immediate annuity is a low risk investment, the returns generated by this annuity are less when compared with the returns generated by stocks. If you are an investor looking for an investment that can give you a high rate of returns, the immediate annuity may not be an option for you.

2. Like with other investments, your money is in danger if the issuing insurance company suddenly goes bankrupt and says goodbye to business.

Investors always fear that the company they invested in will go bankrupt. If your insurance company suddenly goes out of business, your investment will be unsurprisingly drastically affected. Contrary to popular belief, you will not lose all the money you had invested. The impact of bankruptcy to your money will be lessened by distributing your annuity purchase among a few different contributors.

3. The rate of returns you get from your annuity will not increase even if the condition of the stock market or the economy improves.

If the annuity you purchased is an immediate fixed annuity, the interest rate of your annuity account will remain the same as the rate of interest indicated in your annuity contract. When you buy fixed annuities, your investment is automatically locked into a specific interest rate that is based on the financial condition of the company and the stock market in general at the time of your purchase. In other words, you will not bring in profit in case the condition of the stock market improves.

4. If you pass away some time after you have purchased an annuity contract, the insurance company will keep your premium.

The insurance company will keep the money you invested in your annuity account if you die shortly after the purchase.  You can steer clear from this disadvantage by purchasing an annuity contract with a minimum guarantee period. In case of an untimely death, the beneficiaries you indicated in your contract will automatically receive income from your annuity until the expiration of the contract. However, the income they will receive is a little lower than the income you would have received if you were still living.

5. You cannot access your capital. Once you have signed the immediate annuity contract, you can no longer have access to your capital – the premium you have paid to the insurance company. Consequently, you cannot consider the money you invested as emergency money.

These are the five major disadvantages that are associated with immediate annuities. It is important to keep them all in your mind when you are planning to purchase this kind of annuity. Remember, it is a must to weigh and consider all the possibilities.

Are immediate annuities predominantly advantageous or disadvantageous? Enter your zip on the top of this page, and then answer some basic questions to allow multiple providers to find out your highest eligible rate. Answering these questions is important because each of our partners will provide you different rates depending on your individual circumstances and situation.

Tips to Consider Before Buying Immediate Annuity

You may not know it but immediate annuities got some flaws in it which some annuitants find unpleasing. Nothing is exactly perfect, that is a fact. Before leaping into immediate annuity quotes of any kind, try to look at the tips below.

The more you expect from something, the more you get down when those expectations are not met. Keep in mind that buying an immediate annuity must go along with the knowledge that immediate annuities have their downfalls and bright side. To keep you guided before buying an immediate annuity, take a look at the tips that you should consider.

First, assess your entire financial status and situation. Do not immediately buy an annuity to avoid regrets later. Your money is too important to lose with just one wrong move.

Second, if you want to leave legacy to your children or heirs if you have one. Do not pick an immediate annuity that will terminate if you die. Your money will go to the company and not to your heirs. If you want to protect your heirs or beneficiaries in case you die unexpectedly or prematurely, choose immediate annuity type that will guarantee to pay them even after you pass away.

Third, annuities tend to be complicated and complex for some people. Confusions and lack of knowledge about the subject may cause misunderstandings and problems. If you want to go straight and easy do not pick annuities that have innovations in them. By innovations, we refer to the annuities that have combinations of different features. Some of them are hybrids of different kinds of insurance and annuities. This will totally look more complicated than ever to some prospective buyers.

Fourth, do not put all your income money and saving in the annuity you choose. Remember that you can only withdraw a certain amount of money at a given period of time. Always keep an amount of cash at hand in case of some emergencies.

Fifth, choose a company that has already built their reputation in the business or at least choose a company that has a good record even it is just starting in the industry. Look at their financial strength carefully. Your payment will be coming from them so if there are hints that they might be coming bankrupt sooner or later, drop them on your list.

Sixth, compare annuity features knowingly. Compare the similar annuity types. Do not confuse an annuity type to a totally different type because it would not really make sense at all.

Seventh, always read the papers a salesperson or an agent hands to you. He or she might be saying something that is not really tied up to what he or she is saying is in the paper, for all you know. Always be wary on signing anything. Your signature can do a lot. Be sure that you know and you like what you are signing for. Once you sign, it means that you agree in everything he or she just said and presented whether you get the idea fully or not.

And lastly, learn how to say no. Do not let salespersons or agents talk you out of it. Stick to what you like and what you think is the best and get firm about it. There is no one that can know better what’s good for you than yourself alone. Ask for their guidance and assistance but do not let the decision making in the hands of other people. You can look for immediate annuity quotes by yourself if you want to too.

The tips above can be really helpful if applied appropriately. Consider them. There is no harm in trying. Keep those tips always in mind. It will really help you out.

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Things To Consider When Investing On Immediate Annuities

ImmediateAnnuityIt is very likely that majority of retirees will live longer than expected. As a result, they are worried that the money they have will not see them through retirement. This is confirmed by recent happenings in the stock market where retirees have watched their investments vanish into thin air.

The savior at your doorstep is in the name of an immediate income annuity. This plan has been devised by players in the financial industry to wipe out most of your fears and worries. With this product, you may be guaranteed to receive a monthly cheque during your lifetime. The retirement savings at your disposal will allow for establishment of an own pension scheme with the aid of an immediate annuity.

You enter an immediate annuity contract when you give your cash to an insurance firm with the guarantee of getting back your money later in life. This could be every month till you die or for an agreed period of time. Various factors will come in to determine the amount you will get back as your payments. Life expectancy is very important. If the contract includes your spouse, the age factor will have a bearing on the plan.

Consider the following before you purchase an immediate annuity

Control of your money: Be well advised in advance not to pour all your retirement savings into this plan. Experts recommend that you should take a small percentage from your retirement kitty and nothing more. Why? When you give out your cash, the deal is sealed. There’s no turning back. At no one time will you be able to withdraw money from the immediate annuity plan to handle other financial needs. This annuity is actually an irreversible purchase.

Your heirs: If you purchase an immediate annuity to sustain you during your lifetime, death will mark an end to the ongoing payments. You heirs are guaranteed nothing at all even if you had just bought the annuity. Notwithstanding, this barrier can be overcome in an easy way. Your immediate annuity can be structured to stretch beyond your lifetime. Firstly, go for a joint and last survivor annuity if in marriage. This plan guarantees payments for as long as either of the couple is alive. For singles that have beneficiaries, a clause that guarantees payment for a certain period can be added to the immediate annuity plan just in case death strikes before the agreed period elapses.

Inflation: In most packages, payments from these immediate annuities remain unchanged during one’s life time. A number of insurance companies offer a coat of living at a fixed level and you can choose this rider when buying your annuity. This in turn increases your annual income. Therefore, you have to surrender part of the income earlier so as to get bigger rewards in return.

Fees: No management fee is charged at the purchase of immediate annuity that is fixed. A variable annuity attracts other expenses.

Start now and enter your zip on the top of this page to check availability then answer some basic questions to compare multiple providers for FREE to determine your highest eligible rate.

The Pros and Cons of Immediate Annuity

If you’re hoping to enjoy steady flow of income when you retire from active service, you’ve got to know more about annuity for retirement.  It’s a kind of insurance policy that helps you to have steady stream of income when you retire. There are specific kinds and forms of annuity you need to know.  Immediate annuity is certainly one of them. Let’s examine what it’s all about.

Basically, immediate annuity is a kind of   policy that guarantees you quick access to streams of   income from the investment you make.  It’s also known as Payout or income annuity. In this kind of annuity for retirement, regular premiums are not made to investor upon death. Instead, the investor receives   a large sum of cash in return for the regular income payment until he she dies.

There are several options to choose in immediate annuity.  You can choose to make payments for specified period of years or you can decide to be paying until death.

Simply put, immediate annuity as a form annuity for retirement starts to pay right away. Most people going into retirement prefer to go for it.  Even if you’re having a deferred annuity, it can also be converted to immediate annuity if you wish.

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The pros

As a form of annuity for retirement, immediate annuity starts paying right from the time you make the initial investment. This can prevent you from outliving your investment when you retire. You keep on enjoy steady flow of income even before you go into retirement.

If you go for the fixed immediate annuity, you can easily maintain a steady stream of income all through   the days of your life. You can equally enjoy that for specified number of years you may choose.

This kind of annuity for retirement   can prevent you from worry when you retire since you’re sure of steady stream of income. You’ll always have enough cash to settle your monthly bills through the steady income. You also stand the chance of enjoying higher payments than you would have gotten from ordinary savings accounts you may have in a bank.

Meanwhile, if you go for the variable immediate annuity you’ll have to keep the buying power of your life payments ahead of any kind of inflation that may come up.

The Cons

As a form of annuity for retirement, immediate annuity also has some negative as aspects. There may be loss of purchasing power arising from inflation especially with fixed immediate annuity.  There may also be high fees with variable immediate annuity. A fixed annuity guarantees you a set of payment for a specified period of time. However, you may live longer than that specified period of time you choose.  This can put you into trouble since the income may cease to flow anymore.  Again, the fixed payments are not likely to change with the increase in inflation. This can reduce the value of the cash and make it worthless as you retire.

On the other hand, the variable immediate annuity can protect your payments from being affected   by inflation. But the truth is that the payments can go up and down depending on the performance of your investment.

In all, you can always gain a lot from immediate annuity if you succeed in locating a reliable insurer. You have to take your time to consider the various options before you make your choice.