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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:


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.

Why You Should Have Immediate Annuity

Retirement plans are designed in order to support you financially after your retirement and to let you be independent in that phase of life when you are in need of a stable source of income to meet your expenses. There are various types of retirement annuity plans available in the market. The insurance companies offer different benefits on various annuity plans.

There are fixed deferred annuity plan which secure you a stable immediate annuity quote at a regular basis because the principal money invested is used by the insurance company to invest in low risk government bonds and securities. Variable annuity plans offer a high rate of interest but the pay is irregular. Equity indexed annuity combines the benefit of both the plans. The rate of return guaranteed by the insurance company on different policies is called annuity quotes.

ImmediateAnnuityImmediate annuity quote is the index which you have to compare in order to select a suitable plan as your annuity scheme for retirement in case of an immediate annuity quote opted. Immediate annuity is that type of an annuity plan which starts paying out after a fixed annuity period of a month or a year which varies according to the terms of the policy. Additions of death benefits, protection against inflation are things to be considered. Immediate annuity pays you lump sum money as part of a financial arrangement during the life of the policy agreement. Immediate annuity is a safe investment which will support you in your life after retirement.

Some factors involved in determining immediate annuity quote are the market condition, inflation rate and Government monetary policy. The immediate annuity quote is state specific so you need to know whether the scheme is operating in your state or not. State Insurance Commission is a Government body that regulates the insurance companies and thereby influences the annuity plans designed by the insurance companies. If you compare the merits and demerits of annuity plans you’ll find for yourself which suits you best. Immediate annuity quote plays an important role in deciding the annuity plan. Fixed deferred annuity plan gives you a low rate of interest where the focus is primarily on safety of the principal amount and variable annuity is irregular and but pays you high rate of interest on your capital. Thus immediate annuity plan which is also called ‘Single premium Immediate annuity’ is what you may opt if you require a good sum of money post-retirement.

Compare all annuity providers and decide on the best rates for yourself for free! You simply need to enter your zip and then answer just a few basic questions!

When And Why One Should Buy Immediate Annuity

The buyer of an immediate annuity is weighed by two major characteristics. Firstly, this buyer has great desire for a lifelong income on regular basis. Secondly, the individual is eager to start the payments sooner than later without taking any chances. Indeed, a retiree perfectly fits this bill. Such an individual is keen on having savings meant for retirement being converted into income for a lifetime. They simply do not want to run out of cash at any one given time. Retirees whose investments are comprised due to lack of financial security have no better option but this offer.

Actually, they may choose to invest proceeds of pensions or personal savings accumulated over time by purchasing an immediate annuity. Most employees on the verge of retiring usually have big investments in the stock of their companies. These individuals have great financial backing to enable them expand when they finally retire. By so doing, they timely minimize or avoid any possible threats to their income. Therefore, the safest and easiest way of taming any risk that may come by in securing an immediate annuity. At the same time, this decision will materialize into a guaranteed source of income during the retirement period.

Besides retirees, the need for immediate annuities is common among those who reap off from legal settlements, lawsuits inclusive. Usually, the terms dictate that payments should be made cover up lost income perceived to have been realized later, say several years to come. Furthermore, the lost income to be replaced is provided with the same surety as the legal system is able to deliver. Given such an order, nothing other than an immediate annuity rises to the occasion. It is suitably designed to address length and breadth of the matter at hand. The court therefore orders the defendant to buy an immediate annuity in funds enough to satisfy the damage claims presented by the plaintiff. This is enough proof that court cases calling for monetary settlements will be fully handled by this annuity package.

Enter your zip at the top of this page and check immediate annuity quotes for free.

Five General Charges Associate with Fixed Annuity Plans

It is important that everyone understands what a fixed annuity can do for you. A fixed annuity is mostly preferred by many people because it is a very safe of safeguarding your retirement life. Because of the intensity, which comes with the plan, be it financial or time one need to plan well ahead of reaching their retirement age; it would be nice if one takes up an annuity plan ten or fifteen years before retirement age and while at it understanding the cost involved.

Surrender charge – when entering the fixed annuity contract the agreement is that for a certain period of time you are not supposed to withdraw or cancel out your annuity. If you breach this condition then you are liable to be charged a surrender charge, which varies from one state to another the lowest being 5%, and the highest being 25%. To avoid such a charge you will need to know that certain individuals or certain circumstances will not allow a person have an annuity. If you do not have any other kind of savings and you could find yourself withdrawing the annuity because of an emergency and thus the expensive charge. You could also be tempted to have a fixed annuity, so that you can use the proceeds to pay off your taxes. Please don’t, the law makes it clear that everyone under the age of 59 ½ years will be charged a tax of 10% on the principle if they withdraw their annuities before it matures especially in the early stages.

The insurance company will normally need some money to advertisement or marketing money to make the fund plus also to administrate it. These charges are called ‘the load’ and sometimes they could even go up to 3%. It is therefore important that when searching for an insurance company that will offer the best rates compare the load in relation to what you will earning. You could find that insurance is offering 8% interest rate but it has a load of $3 whereas there is a company offering 6% but the load is 1%. It obviously follows that the second company is better.

The following are the other charges on fixed annuity plans that you might be charged depending on which state you are in;

•             Contract fee – the flat rate fee that you are charged every time you take up an annuity

•             Percentage of net assets – This is a regular charge deducted from ones annuity’s current accumulated investment.

•             Percentage of premium – Whenever you pay a premium this charge is automatically deducted; it can reduce as the years go by or when a certain number of years are reached.

•             Premium Tax – You will realize that some states charge this tax on annuities. The responsible insurance company collects the tax by either adding it to your premiums or deducting it when you are receiving your payout or when you withdraw an annuity.

Finally you are always entitled to a free withdraw but that is dependent on the amount you want to withdraw.