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What Is An Annuity?

An annuity is a form of insurance or investment between an investor and an insurance company entitling the investor to a series of annual sums.  The investor pays a premium or lump sum that will, at a predetermined future date, be paid out with the added value of the initial investment. The growth of funds held in an annuity is tax-deferred, meaning no taxes are levied until a withdrawal is made.  All annuities have the ability to bypass probate, so long as a beneficiary is named.

There are two main types of annuities - immediate or deferred.  Deferred annuities are broken up into two categories - fixed and fixed-indexed.  Each works a bit differently and offers unique advantages.

Deferred - Fixed Annuities

With fixed annuities, the investor receives a fixed interest rate for a set amount of time, offering the plan stability and insulation from market volatility.  

Deferred - Fixed-Indexed Annuities

Fixed-indexed annuities are linked to a financial index, such as the Nasdaq, the S&P 500 or the Dow Jones.  With this type of annuity, your principal will follow and appreciate the gains of the chosen index, but remain protected from any market dips or losses.  Many individuals select a fixed-indexed annuity because of the potential for a greater return without the risk of true market exposure.

Immediate Annuities

With an immediate annuity, the investor makes a lump sum payment to the insurance company and the institution agrees to make regular payments back to the investor at a predetermined future date, usually within 30 days.  For those who would like steady income sooner rather than later, the immediate choice would be the best option.  

An annuity can be an invaluable asset in your retirement-planning strategy, and when implemented correctly are a great tool for setting up lifetime income.  We are committed to finding the best possible fit for our clients, and will custom-tailor their retirement plan to adhere to their unique needs.

*Insurance products guarantees are subject to the financial strength and claims‐paying ability of the issuing company, and may be subject to restrictions, limitations or early withdrawal fees. Annuities are not FDIC insured.

Annuities: Clients
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