Introduction to Annuities
Annuities are flexible insurance contracts designed to provide income and help you achieve long-term savings goals. And these are not unused financial vehicles: last year alone, annuity sales topped $200 billion.
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Much like a CD is a contract between you and a bank, an annuity is a long-term contract between you and an insurance company. In essence, the same company that insures your home or protects your family may also help you save for retirement.
After making a single lump-sum premium payment, or a series of periodic payments, individuals can then receive regular annuity payments from the insurance company. These payments can be made over a definite period of time, or they can last a lifetime.
Payments to the annuity owner can also be tailored to begin after the contract has been established for a number of years, or they can begin immediately after the first premium payment is made.
Annuity owners even have the choice of receiving regular fixed interest rates (better known as a "fixed" annuity), or having their annuities grow depending on the growth of underlying variable accounts (referred to as a "variable" annuity).
Over time, insurance companies modified and enhanced both types of annuities; however, their basic premise has always remained the same. And because annuities are issued by an insurance company, Congress allows them to grow tax-deferred under current tax laws.
Now for a real in-depth look at annuities, let's begin with a brief history of annuities. You might be surprised to learn how long annuities have been around.
I contacted Immediate Annuities.com to buy one of my immediate annuities. They were prompt, very responsive, paid attention to detail, understood my objectives, and were superb when it came to staying on top of seeing the funds transfer and issue of new policy documents through to completion.