Various Annuities

There are various types of annuities and with annuities you want to be aware that these are different products available through insurance companies. So you’re always going to be dealing with an insurance company. And you know when you hear the term annuity, it seems like there’s a lot of negative press that’s out there. And from our perspective again, annuities are just simply another tool in the toolbox that you want to be looking at when considering those different types of accounts for your overall retirement plan. So the first one to talk about is an Immediate Annuity. An Immediate Annuity is simply a plan where you give the insurance company money, a lump sum of money and they’re instantly going to pay you out an income stream likely based on your lifetime or based on a period of years. Something you want to be careful of or the big disadvantage that you can see with an Immediate Annuity where you’re taking a lifetime income is that if you were to pass away early on, the insurance company would keep that money. So it may not be the best fit for you if you have you know a family or someone that you want to leave those assets behind to, but if not, you know it may be something to consider. Another type of annuity is a Variable Annuity. So Variable Annuities you have different sub accounts that are maybe invested where you’re tracking the market. So you may see the value go up and down, variable, since the term variable. And so the values will fluctuate, but there may be different guarantees that they would attach to that such as an income guarantee or a death benefit guarantee. So again, there’s maybe different fees and costs associated with a Variable Annuity to be aware of, but again maybe a possible fit. A Fixed Annuity, a Fixed Annuity is simply a set interest rate for a set term. So you may go into this knowing exactly what you’re going to get. How long you’re going to into the account, what interest rate it’s going to pay and then upon maturity you take that money out and move on essentially. Another is Fixed Indexed Annuity. It’s one where your principal is guaranteed. So you can’t lose anything. But your return is tied to an index in the market such as like the S&P 500. So you won’t get the full upside of the index necessarily, but you get some percentage of when it goes up. But if that index goes down, your principal again is protected and you can’t lose anything. Again, there’s a set period of time that you’re going to be invested there. So it may be five, seven, 10 years. So maybe you have one of these different types of annuities and perhaps you don’t fully understand the different features or benefits or fees. That would be something we’d be happy to offer a second opinion and again help analyze these different various types of annuities.