WEDNESDAY, JULY 29, 2020
 Financial security is something that we all strive to achieve, and it take a lot of work to save for retirement. However, there’s no guarantee the money you save while working will last for the rest of your life. Therefore, if you want more income support in retirement, then you might buy an annuity. Through these insurance investments, you will be able to stabilize your money flow even though you are no longer part of the workforce.
Annuities are investment portfolios managed by life insurance companies. In many ways, they function like the cash value of whole-life insurance policies. They allow you to deposit a sum of money into an investment account. For the cost of a regular premium, the insurer will maintain that investment, and then pay you returns. Therefore, you will be able to receive income to use as you see fit in your later years.
What types of annuities can I buy?
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Like with most insurance policies, annuities offer options. You can tailor yours to the investment and payment structure that works for you. There are two primary types of annuities:
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Income annuities begin to pay out immediately upon your investment. Usually, the contract holder will only wait a few months before it begins to provide returns.
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Deferred annuities do not begin to pay returns for a certain number of years. You will continue to pay your premium on the annuity during that time period. At the same time, the money in your account will accumulate value. When the deferral period ends, the annuity will then begin to pay you at regular intervals.
Whichever annuity option you choose, one of the primary benefits is that you have a promise of income even if you no longer have the same source of a paycheck you once did. Therefore, the annuity will enable you to better plan the future.
If you choose a deferred annuity, you even have the option to choose several payment structures:
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Fixed annuities will pay you a fixed rate of return for a specified period using the money in your account.
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Variable annuities will offer you payment throughout the remainder of your life. However, the rate of return might vary. You might need to buy a special living benefit rider to be able to protect your income for the rest of your life.
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Indexed annuities offer protection for the principal investment on the account. Therefore, there is less risk of significant losses. However, the annuity’s growth might face a cap, too. All the same, the policy can continue to provide a lifetime return on income.
Once you choose your annuity, you can work with your provider to work out the payment structure that will offer you the most beneficial income returns for the rest of your life.
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