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Types of annuities and benefits of retirement annuities
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Posted On :
Jan-17-2012
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Article Word Count :
416
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Annuities, especially the retirement annuities actually prove to be quite useful as well as helpful when an individual faces the truth of retirement. These will make your financial positions secure even after your retirement.
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Annuities are a great way to make path for a steady income even after your retirement. Usually this involves investing a lump sum amount of money to a company, especially an insurance company. The insurance company will go on paying you a small amount of money as interest throughout the time period for which you have invested the lump sum money. This money will act as your income and will allow you to maintain a decent living.
It can be said that annuities are the equivalent of fixed deposits in banks. The difference lies in the fact that in most of the cases, the insurance companies in which the investments have been made offer higher rates of interests than the banks. There are two categories of annuities-immediate and deferred.
In case of immediate annuities a person begins to receive the payments (interest) within a short span of time from making the first investments. These are favorable for those who have retired or are on the verge of retiring as they promise quick money in hand. That is why most of the retirement annuities (that opted by retired and senior individuals) are immediate in nature.
In case of deferred annuities, the money that is invested into an insurance company is left as it is. The regular interests are not paid to the investors and are instead left to pile on the principal amount. Occasionally an investor may come and would request to be paid from his or her accumulated money.
The most advantageous part of annuities is that they help in diverting a large amount of your savings and thereby save you from paying taxes. All the money that you have invested in the company keeps on adding each year but then there are no pangs of tax from the federal government.
While some retirement annuities are immediate in nature, there are others that are fixed in nature. The fixed annuities are best suited for retirement plans of any individual. This is because of the fact the fixed annuity makes sure that the investor gets a portion of the money as interest until and unless he or she pulls out the investment. What the investors get as interest may be small in amount but the good thing is that the money will remain unaffected even if there are meltdowns in financial fields. This little fact makes the fixed annuity the most referred saving plans for the old and those who have retired.
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Article Source :
http://www.articleseen.com/Article_Types of annuities and benefits of retirement annuities_134663.aspx
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Author Resource :
Robert Cook is a business consultant who has good information on retirement annuities . For more information on annuities he recommends you to visit www.totalreturnannuities.com/ .
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Keywords :
Annuities, retirement annuities,
Category :
Finance
:
Finance
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