« Structured Settlements | Main | Viatical Settlements »

Jan 4
Annuities Anyone?
What is an annuity?

An annuity is a contract between you and usually, an insurance company.  The contract specifies an exchange of your cash now for a stream of payments from the insurance company.  The payments can be fixed or variable.

There are three main variables in most annuity contracts.  These are when the stream of payments begins, whether you will receive a fixed or variable amount each specified period, and when and under what circumstances you can get principal back.

An immediate annuity begins the stream of payments to you immediately upon receipt of your investment.  A deferred annuity delays the stream of payments for some specified period or to some future date such as your retirement.

Fixed annuities pay you the same amount each period into the future.  In periods of high inflation, you may not have as much buying power as you thought you would.  This is similar to the coupon payment on a bond.  Variable annuities do not pay a fixed amount.  You are given the choice of many funds to invest in and what you get paid depends on how good your investment choices were.  Getting your money back is one of the great challenges or drawbacks of most annuity contracts.  Most contracts allow you to get the interest you have earned on the principal or up to 15% per year without being charged a penalty.  But be prepared for a penalty charge if you try to take more than the amount permitted in the contract.  If you withdraw before 59 1/2 years old, you may also be subject to tax penalties. 

You can buy an annuity contract that gives you liquidity whenever you need it, but it costs more for the same payment stream.

In my next post I'll discuss Viatical Settlements.

1 Comments/Trackbacks




» This Week We Know More About... from Know More Media
This week, on the Know More Media network, we know more about a great book about setting goals and a New Year's Resolution to develop a corporate blogging policy to share with those Fortune 500 companies that aren't yet blogging.  James ... [Read More]

submit a trackback

TrackBack URL for this entry:

post a comment

Name, Email Address, and URL are not required fields.





Comment Preview

« Structured Settlements | Main | Viatical Settlements »

Advertise

Related Resources

sponsored ads



Incredible Hall of Acclaim.

subscribe


Prefer Email?
Subscribe below-

Enter your Email:


Powered by FeedBlitz What's this?

Current News

Support This Blog

business social media

Use these fast growing business social media sites to promote your business, feature your products, spotlight your business leaders, create links, and drive traffic back to your company site, all for free!

BIZZlogos - Add your logo - free link to your site
BIZZphotos - Add photos of your products and people
BIZZprofiles - Submit your profile and build your online visibility
BIZZspotlight - Spotlight your business with free links
BIZZvideos - Videos about businesses, products and business people.
BIZZbites - "Digg" for Business - Submit your articles and posts

know more media network

View Network Map

Network Feed List (OPML)

Know More Media Network
Feed


we support unitus

PRWeb

Influencer



GrowYourFunds is a member of the Know More Media network of business related blogs.

Here are some current headlines from some of our business publications:

ProductivityGoal

CallCenterScript

AdHurl

TheBizofKnowledge

LandingTheDeal

CustomersAreAlways

HealthCareVox

WebMetricsGuru

TheInsurancePolicy

MarketingBlurb