Planning for the Future with Annuities
By nature, insurance is designed to give you security and peace of mind. In addition to auto, home, and life insurance, many people purchase annuity contracts as part of a retirement portfolio. An annuity is a type of investment contract offered by insurance companies pays out a fixed stream of payments to an individual. You can invest in an annuity with a single lump sum or gradually over time. Depending on how you choose to invest in an annuity, you can begin to receive payouts right away or defer them to a later date. The ISU – Armac team will guide you through the different types of annuity contracts so you can make the wisest choice for your financial future. We insure clients in Victorville, Apple Valley, Hesperia, and nearby California. Contact us to schedule a complimentary consultation.
All types of annuity have the same basic characteristics: you pay into a fund during an “accumulation” phase, and that fund gives you monthly payments at some point during an “annuitization” phase. For some, the accumulation phase is a single, lump-sum payment. For others, it’s a recurrent deposit over time. There are a few decisions you’ll make to make sure your annuity works for your lifestyle.
Immediate and Deferred Annuities
First, you’ll need to determine if you want an immediate or deferred annuity. Immediate annuity requires a large lump-sum payment like described above. Clients with an influx of cash from one place or another – such as the sale of a home – or who have already built up substantial cash savings often choose this option. If the money you invest in an immediate annuity has already been taxed, you’ll only pay tax on the interest it makes. What’s great about an immediate annuity is that you can begin to receive regular payouts immediately. This helps regulate your monthly funds and gives many clients peace of mind.
As its name implies, a deferred annuity will not pay out cash until a later date. Clients without a large lump sum available to invest up front often choose a deferred annuity, because they can invest in it over time. This type of annuity is increasingly popular as part of our clients’ retirement financial portfolios.
Fixed- and Variable-Rate Annuities
A second decision you’ll make for your annuity is whether your rate is fixed or variable. Fixed-rate annuities ensure that you will make at least a certain percentage interest on your investment over time. Fixed rates equal steady growth over time, although they may make less long-term than some more aggressive variable-rate contracts. Variable-rate annuities are riskier in that they fluctuate with market value and have variable rates of return. These are for more hands-on investors, and they stand to make more over time than fixed-rate contracts, with the right moves.
Let Us Guide You through Your Options
For a less-seasoned investor, annuities can seem complex at first glance. At ISU – Armac, we have more than 20 local, experienced agents who can help show you the ropes and help you identify what annuity contract makes sense for your family. We’re located in Victorville and help clients here and in Apple Valley, Hesperia, and surrounding California communities. When you’re ready to learn more about annuities, call us to get started.