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Annuity Definition

At its most basic, an annuity is a contract between an investor and an insurance company. The investor gives the insurance company either a lump-sum premium, which is also known as a single premium, or he or she provides multiple premiums over time. The time during which he or she makes ...

Annuities Pros and Cons

Fixed annuities pay a fixed rate of return on the premium. The most popular type of fixed annuity is called an immediate fixed annuity. Immediate fixed annuities are funded with a single premium. They are usually purchased with cash from a savings account, the death benefit from a life ...

What are Annuity Riders

Annuity riders are like any other rider that can be attached to an insurance or financial product. Just as a rider that protects valuable diamond jewelry can be attached to a homeowner's insurance policy, a rider can be attached to an annuity to protect its value above and beyond the ...

What is an Annuity Death Benefit

Some insurance companies sell annuities that have a guaranteed death benefit. Other companies sell the death benefit as a separate rider. Either way, the death benefit is considered to be an important feature of an annuity. While some insurance companies structure the death benefit ...

Are Annuities Safe

Annuities have long been considered the safe investment alternative especially for people who are most concerned about securing their retirement income.  Life insurance companies have been issuing annuities since the 19th century. Since then, even during times of the most difficult ...

Benefits for Annuity Owners

Annuity owners have sometimes been characterized as cautious, conservative, risk averse and, in some cases unsophisticated, yet they may very well have the last laugh once all of the benefits of annuity ownership are realized.  Frankly, there is no other investment vehicle that provides ...

How Annuity Payments Work

An annuity is a financial contract between an investor and an insurance company. The investor gives the insurance company a specified amount of money in exchange for guaranteed payments. Annuities can either be deferred, meaning that taxes on the earnings along with the distribution of ...

What Most People Don’t Know About Annuities

What most people don’t know about annuities would fill a book. That is because annuities are contracts that contain many features, benefits, and costs. Rather than attempt an encyclopedic recitation, this article will focus on basic elements of annuity structure that are not well ...

Annuitization Explained

Annuitization is the process of converting a capital sum into a level, regular stream of payments. In practice, annuitization is normally synchronized with retirement, although this is not invariably true. By definition, retirement signals the end of earned income. The retiree will need to ...

When to Purchase Annuities

Few topics in finance preoccupy the general public more than when to purchase assets. Popular wisdom envisions investment success as knowing when to buy and (although this gets less attention) when to sell. In fact, this mentality is suited for trading, not investment. Few people possess the ...

Are Annuities a Good Investment?

Every financial professional periodically faces the following question: Is X a good investment? X may be stocks in general or a particular stock; bonds in general or the debt of a particular company or government; a real asset such as gold or real estate or Egyptian ceramics; or a ...

Buy an Annuity

Time was when the financial world was neatly compartmentalized and access into and between the different compartments was strictly limited. If you wanted to buy insurance, you called up a particular insurance company and made an appointment with a representative, who came to your home. You ...

Annuity State Guaranty Coverage

Unlike bank deposits and CDs, annuities are not covered by federal (FDIC) insurance designed to protect consumers from the consequences of the issuing company’s insolvency. Insurance companies are regulated at the state level, however, and each state has a guaranty fund intended to ...

Structured Settlement Annuities

Structured settlement annuities are specialized annuities issued by insurance-company affiliates to compensate plaintiffs in personal-injury tort litigation. They are the artifact of two institutions: the court system and the tax system. Prior to 1982, personal-injury plaintiffs ...

Tips for Selling Your Annuity

In the classic sense, annuities are intended to be terminal vehicles. That is, they are inherently designed to provide guaranteed income for life and cease operating only upon death of the annuitant(s). Annuities are retirement-oriented financial instruments, geared toward the final phase of ...

Annuity Investment Risks Overview

Annuities are contracts between individuals and insurance companies. Annuities are investments that also possess various insurance features. The purpose of insurance is to reduce risk. Thus, the association of annuity investment with risk may seem anomalous. In fact, risk is omnipresent and ...

Annuities for Dummies

An annuity is a contract between an individual and an insurance company. The individual pays the insurance company money, either in a lump sum or regularly over time. The money is invested. When the individual retires, he or she begins receiving regular payments from the insurance company. ...

What Is An Annuity?

The word annuity refers to a regular stream of level payments, whose duration may be specific or indefinite. In the United States, the word has come to be identified with multi-purpose insurance contracts terminating in a payment stream. This makes it logical to ask: What is an annuity ...

How Do Annuities Work?

How do annuities work – and what do they mean for your  financial situation? Annuities can be an effective insurance investment for you  and your family. However, just like any other financial choice, a wise investor  should research annuities and see how they work to ...

What Are Annuities?

The question that comes to mind when you first hear about adding annuities to your investment portfolio is “what are annuities?” The short answer is that annuities are agreements between two parties in which one party provides a “stream” of payments – a series ...

Common Annuity Questions Answered

If you are thinking about planning for retirement, you probably have many annuity questions. ...

How Does An Annuity Work?

The first question you’re likely to ask yourself when entering the annuity universe is how does an annuity work? The answer to this question depends on the type of annuity program you select. There are generally three broad categories of annuity, each working a bit differently: fixed, ...

Annuity Pros and Cons

Like all financial products, annuities come with pros and cons which everyone getting into them should be aware of. Starting with the pro side, the main advantages attached to annuities are the financial security and tax deferment features they offer, which we will briefly ...

Annuity Investment Risks

Annuities have often been marketed as good investment vehicles for risk-averse investors, like retirees and other people who can’t afford to gamble with their money. Annuities work such that the annuity holder makes a payment or a series of payments to the company offering the ...

How Annuities Work

Annuities have lately become some of the most popular investment options available to many people, especially among retirees and people who are prudently preparing for their retirement. An annuity can be described as an arrangement in which the annuitant (the person taking up the ...

Annuity 101

If a person has a lot of money and decides not to spend it, there are ways of making this grow. One option is keeping it in the bank and letting it grow interest. The other is investing it in the stock market with the help of a financial consultant. This professional will be able to know ...

Annuity Basics

Annuities can be very good things for some of us and a disaster for those of us who have not been made aware of the pitfalls and traps that in turn can easily befall them. Since most people have or are going to look into annuities as a retirement or and an investment vehicle, make sure it ...