What You Need To Know Before Choosing A Variable Annuity
In this article we provide a general overview of variable annuities, and some of the things to consider when choosing the right annuity for you.
As with any annuity insurance, a variable annuity is a contractual agreement between an investor and an insurance company. The investor provides an upfront payment - either one time, or instalments.
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.
A variable annuity allows investors a degree of flexibility in terms of how the principal will be invested. Investors may choose from a list of investment vehicles; generally stocks and bonds which they may choose from as they see fit.
A variable annuity gives the investor the best of both worlds - they may invest outside of the annuity itself but at the same time, they receive the benefits of tax deferral typical of annuities.
Another option usually provided with variable annuities is the choice of converting to a fixed annuity. Investors may decide to invest their payments in bonds and stocks; or if they would rather not expose themselves to the risks posed by market fluctuations, they can choose a fixed interest rate instead.
If you have one of these annuities, you can choose to allot a percentage of your payments to a fixed account and keep the rest invested in stocks and bonds; whether in a fixed rate account or invested in the market, taxes are deferred until you receive payments. When your annuity begins to provide you with returns, you may choose to receive payments as installments or as a lump sum payment.
Historically, major US stock markets have provided investors with great returns. As we've seen, they can greatly drop, however, over the long-term, most economists and experts believe the stock market to be a good investment. A variable annuity allows you to receive the tax deferral benefits, while allowing you to flexibly invest in the stock market.
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. - 23310
As with any annuity insurance, a variable annuity is a contractual agreement between an investor and an insurance company. The investor provides an upfront payment - either one time, or instalments.
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.
A variable annuity allows investors a degree of flexibility in terms of how the principal will be invested. Investors may choose from a list of investment vehicles; generally stocks and bonds which they may choose from as they see fit.
A variable annuity gives the investor the best of both worlds - they may invest outside of the annuity itself but at the same time, they receive the benefits of tax deferral typical of annuities.
Another option usually provided with variable annuities is the choice of converting to a fixed annuity. Investors may decide to invest their payments in bonds and stocks; or if they would rather not expose themselves to the risks posed by market fluctuations, they can choose a fixed interest rate instead.
If you have one of these annuities, you can choose to allot a percentage of your payments to a fixed account and keep the rest invested in stocks and bonds; whether in a fixed rate account or invested in the market, taxes are deferred until you receive payments. When your annuity begins to provide you with returns, you may choose to receive payments as installments or as a lump sum payment.
Historically, major US stock markets have provided investors with great returns. As we've seen, they can greatly drop, however, over the long-term, most economists and experts believe the stock market to be a good investment. A variable annuity allows you to receive the tax deferral benefits, while allowing you to flexibly invest in the stock market.
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. - 23310
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Need to learn more about annuity options and other types of annuities visit http://www.variableannuityquote.com
posted by Mr. Forex at
6:24 AM
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