Annuities – Frisco, McKinney, Prosper, Celina, Allen, Plano
Annuities is a subject or topic that most people have heard of but don’t fully understand on how it works or how it relates to them personally. Due to the changes over the last couple of decades this financial product has evolved leaps and bounds. Hence I believe everyone should at least hear about the differences and know what is available to them and their families alike.
So What Is An Annuity?
Annuity is a financial product that is traditionally considered as a long term investment between yourself and the named insurance company. With this product, you will utilize after tax dollars depending to fund your annuity. Which then the desired insurance company will then invest that desired amount in return for tax free income for either you or your beneficiary (dependent on the ability for the issuer paying the claim). Now there are 2 main types of annuities to choose from, with a variety variations in each one.
Fixed Annuity, this financial product guarantees the interest rate on the contract.
Variable Annuity, this is where your earnings can change or fluctuate depending on your investments situation, hence you may get a larger return or less depending on 3rd party circumstances. So this is considered to have the greatest risk between the two.
Unlike all the other financial products, there is no limit to the amount that one person can invest into a annuity. These funds can also grow steadily in a tax deferred environment, and upon disbursement you will pay your given tax rate upon the earnings when they are withdrawn.
What Annuity Options Are Available?
When we think of annuities even though there are a lot of options to choose from, most people classify them into 2 classes which are immediate annuities and deferred annuities.
Immediate Annuity – this can be paid immediate or right away after it is issued. Traditionally you can choose how you would like to receive your income i.e. lifetime or a specified time period. These payments will be determined by a calculation between your overall lump sum principal and your general life expectancy.
Deferred Annuity – unlike the immediate option, where it takes action right after issue. This annuity is divided up into 2 general phases like accumulation phase and distribution phases.
- Accumulation Phase – this is phase where you add money into your financial product or annuity, this can be done through a general lump sum or through a series of payments via monthly, quarterly, or annually. In this phase your funds will grow tax deferred until you trigger the distribution phase.
- Distribution Phase – this phase signifies the distribution of the money or receiving funds from your annuity. These payments can be made in monthly installments or annual payments either of which will help with your general finances by providing another regular income for the specified time amount in the contract.
Why Buy Annuities?
Overall annuities can be considered a overall good investment for those folks that are willing to take on more risk in the general hopes for larger return or payout. The general earnings can be utilized to supplement your income during the retirement years for a specified period, guarantees your financial independence as you age, and it could leave potential inheritance for your loved ones.
For more information about annuities in Frisco, Mckinney, Prosper, Celina, Allen, Plano Texas area and how to plan for future utilizing an annuity. The folks at Sweetness Insurance are more than happy to answer any questions and to help you set up your investment as well. Thank you for your interest in an annuity.
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