As Investments in annuities is an excellent way of saving for retirement. Annuity savings assure future security and have no limitations of time or investment extent.
Annuities give an assured payback to the investor and are of different types according to the payout options and duration. Payment options are decided on by the investor and the accrued money can be taken in time of great need. Annuity investments can be bought jointly and the beneficiary will be covered even after the demise of one of the investors.
Annuities are a great investment, however, the US Securities and Exchange Commission hosts in depth information so that investors can make educated investments; see: http://www.sec.gov/investor/pubs/varannty.htm.
Annuities have different disbursement options: Life annuity is one where the investor will receive payments until death; Life Annuity with Period Certain is one which pays for a fixed period of time even after death to the joint owner or beneficiary; Life Annuity with Amount Certain is one where instead of the number of years the payment will be made until a fixed pre-determine amount is reached; Life Annuity with Joint Survivorship is one where the beneficiary/survivor will get payments indefinitely when the investor dies.
Here are a few expert tips:
1. Study different annuity plans and make a note of what you are looking for. There are different annuities depending on their payout options and durations. Know what an “immediate or deferred plan” is and what “fixed or variable” plan entails.
2. Ask whether there are any in built costs charged by the annuity plan. Many plans charge an annual or entry fee.
3. Determine whether you will lose any money if you decide to stop investing in mid-way.
4. Calculate what amount of money earned will be paid out as taxes on income. Or what will happen if you defer tax payment until withdrawal.
5. Learn all about payout options. Most annuities have five payout options: Life Only, Certain and Life, Fixed Period, Fixed Amount, Joint and Last Survivor.
6. Study the health and reliability of the company that has floated the annuity scheme. Find out the credit rating of the company as it will reflect the financial health of the company. A credit rating is an independent assessment of a company’s ability to pay claims on time and meet all other financial obligations.
7. Use the services of an experienced investment agent. An agent will help you understand the annuity schemes terminology and aspects like estimates, projections, and guarantees.
8. Avoid listening to unwarranted advice to replace an annuity you have chosen with another. Think losses before you get swept away by a clever sales pitch.
9. Determine your risk element. In annuities you must know what the investment risk is. Find out whether your risk is low or high. The more aggressive a fund the higher is the risk.
Annuity schemes are popular and the earlier the investment begins the greater the benefit for the investor.
