An Introduction To Variable Annuities
This article will give you a quick rundown of the most important things to think about when you're looking for a variable annuity as well as how to decide which annuity will best meet your needs.
Like any other annuity, a variable annuity is a contract between an investor and an insurer. The investor makes a lump sum payment or ongoing payments to the insurance company.
The investor then receives payments consisting of a portion of the principal as well as the interest earned by said principal on an ongoing basis. These payments may continue for life or for a set period of time as stipulated by the contract.
With a variable annuity, you decide how to invest the money that you have placed with the insurance company. There will be a list of pre selected funds ranging from highly aggressive stocks to conservative bonds and you choose how you wish to invest.
With a variable annuity, investors have the ability to invest their money in vehicles which are outside of the annuity proper, but also enjoy the tax deferral benefits of an annuity.
Variable annuities generally also include an option to convert the annuity to a fixed annuity. During the life of the annuity, the investor may choose to keep their payments invested in stocks and bonds, with the value of their investment fluctuating with the markets. Alternately, the investor can opt for a fixed interest rate if they would prefer to avoid the risks of the stock market.
A portion of your annuity payments can also be allocated to any account of your choice which provides a fixed interest rate. Your investment can be thus shifted without having to pay taxes on these gains until such a time as you actually receive a payment. Once you begin receiving payments, you may choose to receive them as regular ongoing payments or as a lump sum.
Generally speaking, investors do very well with a variable annuity invested in the major US markets. Though there is always some risk involved with investing, most economists and financial experts regard stocks as a solid investment which provides flexibility and tax deferrals.
Before deciding on a variable annuity, investors do need to keep in mind that there are costs associated with these annuities which can be upwards of 3%. You'll want to make sure that you understand both the costs and benefits before choosing variable annuities as a way to invest. - 23210
Like any other annuity, a variable annuity is a contract between an investor and an insurer. The investor makes a lump sum payment or ongoing payments to the insurance company.
The investor then receives payments consisting of a portion of the principal as well as the interest earned by said principal on an ongoing basis. These payments may continue for life or for a set period of time as stipulated by the contract.
With a variable annuity, you decide how to invest the money that you have placed with the insurance company. There will be a list of pre selected funds ranging from highly aggressive stocks to conservative bonds and you choose how you wish to invest.
With a variable annuity, investors have the ability to invest their money in vehicles which are outside of the annuity proper, but also enjoy the tax deferral benefits of an annuity.
Variable annuities generally also include an option to convert the annuity to a fixed annuity. During the life of the annuity, the investor may choose to keep their payments invested in stocks and bonds, with the value of their investment fluctuating with the markets. Alternately, the investor can opt for a fixed interest rate if they would prefer to avoid the risks of the stock market.
A portion of your annuity payments can also be allocated to any account of your choice which provides a fixed interest rate. Your investment can be thus shifted without having to pay taxes on these gains until such a time as you actually receive a payment. Once you begin receiving payments, you may choose to receive them as regular ongoing payments or as a lump sum.
Generally speaking, investors do very well with a variable annuity invested in the major US markets. Though there is always some risk involved with investing, most economists and financial experts regard stocks as a solid investment which provides flexibility and tax deferrals.
Before deciding on a variable annuity, investors do need to keep in mind that there are costs associated with these annuities which can be upwards of 3%. You'll want to make sure that you understand both the costs and benefits before choosing variable annuities as a way to invest. - 23210
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posted by X - Men @ 6:21 AM
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