Before purchasing an annuity, it’s important to know the fundamentals. Here are some helpful annuity basics to cover.
What is an Annuity?
An annuity is a contract between a policyholder and an insurance company. You make premium payments. In exchange, the insurer provides certain contractual guarantees. These guarantees cover a variety of contract components, including income, interest rates, or withdrawals. Premium payments may be a one-time lump sum or a series of payments over time.
5 Annuity Types
There are five types of annuities:
Fixed Index Annuity
Via a fixed index annuity, you’ll have the ability to take advantage of index-linked growth. You can enjoy some growth potential for your money, balance protection with the risk of other (and more volatile) assets like stocks, and prepare for a financially confident future.
Guaranteed Lifetime Income
When you retire, things change. In many cases, retirees’ financial paradigm shifts from accumulation to preservation. Annuities represent a vehicle for preserving retirement assets while providing a steady income stream for the rest of your lifetime.
Lifetime Income Riders
What is an Income Rider?
An income rider is an addition to a financial product. It’s an extra feature which may be purchased as a complement to an annuity contract. The income rider is issued along with a base contract. All income riders are different from each other.
Annuity Alert
Unfortunately, the annuity marketplace can present misleading sales messages to consumers. This information smoke-screen may make it difficult to discern what’s in your best interests. Here are some helpful trends to consider when you’re evaluating the merits of any sales pitches, claims, or assertions.
Safe Money Alternatives
You can get the income you’ll need by building your retirement on a “Safe Money” foundation, or prudently choosing conservative, income-generating vehicles with guarantees. There are many low-risk options which offer protection for your money, but only annuities can offer market protection and guaranteed income for life.