Income Annuity Quotes
If you are currently looking for income annuity quotes, you may be disappointed to know that your options are fairly limited. Interest rates around the world are at the lowest levels available in years. If you want a guaranteed rate on your annuity you may be able to lock in a rate of 3% currently with a few companies. This means though that your annuity value will not go down with a potential market downturn. It will not go up with a market rally either though.
If you do not want to participate in any market fluctuation getting income annuity quotes on a fixed annuity is your best bet. In order to get a rate as high as the above mentioned 3% you will have to lock the annuity in for at least 5 years. You may not have as much flexibility for taking money out during the 5 year period either. To get more flexibility, you will have to accept a rate in the 2 to 2.5% area. Remember that you can only take a distribution from your income annuity after reaching age 59 ½ without incurring a 10% penalty plus paying income taxes on the interest.
You can get income annuity quotes online at insurance websites. There are a lot of companies advertising good rates, but in the current interest rate environment, there are usually restricts involved. Read the fine print before you purchase.
Alternatives to Locking into a Low Fixed Annuity
After you get a few income annuity quotes, if you decide that you really don’t want to lock into these low rates for a long period of time, you may want to consider a variable annuity contract with income guarantees. In this contract you will be invested in the stock market through a number of mutual funds. This means that your contract value can fall below the amount you invested. However, if the markets go up, your contract value will go up also.
If you have 20 years until you retire you should have time to recover from market slides. If however, you don’t have that long until you retire, you may want to purchase a rider to go onto your variable annuity that will guarantee that you have a set income base from which to draw upon at retirement.
You can get check with some of the top variable annuity companies and get income annuity quotes. Check out which ones have the highest guarantees and then check the cost of these income guarantee riders. Many of these riders will have a cost starting at around ½ % of the amount invested.
You may be able to get a 5% increase in your income base guaranteed for your contract. That means that if you invest $100,000 and leave it in the annuity for 10 years; you will have a minimum income base of $150,000 in ten years. You will be able to start taking withdrawals of 5% of $150,000 at your retirement. Keep in mind that you need to be sure to read the guidelines on the contract you purchase to make sure of every detail regarding the guaranteed income rider.
Before you purchase an annuity you can look online for some of the top companies that offer income annuity quotes on their riders. These quotes will change from time to time so double check before you make a purchase. After you purchase the annuity, this is a part of your contract and the rate will stay the same for the duration of the contract.
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Key Points to Think About
When you start looking for income annuity quotes and benefits, you need to start out by selecting insurance companies with high credit ratings. This is important for obvious reasons. One thing you must remember though is that fixed annuities rates and return of principal is directly tied to the insurance company’s ability to repay.
Typically over the years this issue has not been a problem for most people; however you don’t want to be one of the few who are affected by it. Make sure that the insurance company is solid if you are purchasing an annuity with them, especially if it is a fixed annuity.
The assets of a variable annuity are not as directly tied to the insurance company’s assets. They are held by the various mutual fund companies instead. However, the guaranteed income riders are directly tied to the insurance companies ability to honor them, so in this respect, the credit rating of the insurance company is important also. If the insurance company has problems at least you will have your account value, but you may lose the guarantee benefits if the company is not in good financial condition.
Fixed Annuity Rates vs. Variable Annuity Guaranteed Income Rates
In conclusion, currently you can expect to get about 2-3% on a fixed income annuity over a five to seven time span. You will have no fluctuation in the amount of money in your annuity but fairly low returns. You can invest in a variable annuity and accept market fluctuation of your contract value but purchase a guaranteed income rider for a set rate of increase of around 4-5% guaranteed per year. The difference is, you will only be able to take out your contract value if you want a complete distribution at retirement.
If you are only concerned about the level of annual income you will receive at retirement the variable annuity with an income guarantee rider will currently give you the best results if you can handle the market fluctuations. If you cannot handle the market volatility you need to look for income annuity quotes on fixed annuities only. If you have several years until retirement, you can lock in at the current rates for a shorter time span and if interest rates increase, renew at the higher rates later on.
Companies with the Highest Fixed Annuity Rates
Although the interest rates on fixed annuities are low right now, you may be able to lock in 2% for 5 years with companies like American National Insurance Company or American General. These are fixed annuities not variable annuities with riders.
The company with a variable annuity with one of the best guaranteed income rates is Ohio National. Rates are subject to change so check with the specific companies before you make a purchase.
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