Different Annuity Types Offer Various Possibilities

Annuities come in all shapes and sizes, but which one is right for you?

The annuity options are plentiful and include:

• Immediate Annuity
• Deferred Annuity
• Fixed Annuity
• Variable Annuity

The immediate annuity gives you the ability to receive income immediately for a set period of time or for the remainder of your life (can be received on monthly, quarterly, semi-annual or annual basis). The choice of contracts includes fixed immediate annuities (guarantee level payments regardless of how market performs) and variable immediate annuities (offer regular fluctuating payments that reflect the performance of the equities whereby they are invested). This option proves especially good for individuals who are nearing retirement and find the need to supplement their income.

The deferred annuity comes into play if you are searching for a fixed income only after a certain period of time. This allows the income you invest to keep on growing and collecting, only coming to you once you are really in need of it. Remember that the income accumulates and multiplies on a tax-deferred basis, with the annuitant only paying taxes once they begin to withdraw the money. Deferred annuities also offer a death benefit, meaning that if the annuitant dies, the annuity income is paid to their heir, including any investment income that was accrued. This form of annuity is best for those individuals who still have some time remaining before retirement.

For the fixed annuity, you have a financial vehicle which pays you a fixed income monthly from the time that you decide to begin getting money. The rate of return or the money, which is tax deferred, that you receive monthly is pre-determined and will not change. This kind of annuity is best for those individuals who are not big risk takers and like knowing how much money is coming their way each month.

The variable annuity will invest your money in stocks and bonds, and that income is subject to change each month due to market fluctuations. The income grows on a tax deferred basis, and the annuitant can decide to receive the returns immediately or over a long-term basis. The majority of variable annuities also make available a fixed account with a present interest rate declaration as an option for allocating premium or current assets. This product is a good selection for those individuals who are younger and not fearful of the market changes.

Keep in mind that there are several manners in which you can obtain the annuity income.

A lifetime or straight life annuity choice is one whereby you will be paid annuity income for all of your life. This choice allows you to receive a regular income as long as you live, even in the event the money you invested toward the annuity dries up. In some instances, if you pass away prior to the fund money being exhausted, no money will be paid out to either your dependents or heir. The option here of receiving money is a plus for those individuals who need to take care of their own needs and want to be sure of not outliving their assets.

A joint and survivor annuity is where the individual is paid annuity income for as long as they live and even following their death. Meantime, the chosen survivor receives income for a fixed period of years and in some instances, the remainder of their lives. This option is best suited for individuals who have other responsibilities and must care for their dependents.

A refund annuity gives annuitants income for the duration of their life. In the event they die and have not obtained all the payment that is due to them in lieu of the premiums they have paid towards the annuity, their beneficiary or dependent has the chance of receiving the money that the individual did not get in their lifetime. This option is mostly geared towards individuals who are considering retiring from work and those who believe their Social Security benefits will not be suffice to finance their retirement.