Is An Annuity Right For You?
An annuity is a financial product designed to provide you with a guaranteed and regular income. You can buy an annuity with a lumped sum or through making multiple payments over time. Typically, an annuity would be used during your retirement years to provide you with consistent income at an interval that works best for you.
Types of Annuities
There are many types of annuities and its important that you understand the pros and cons of each before you decide which type fits your financial needs.
A life annuity is designed to provide you with guaranteed lifetime income. For example, payments will continue even after you've been paid out the full cost you purchased the annuity for. Essentially, the longer you live the more your annuity will provide for you. In most cases though, no money goes to your estate or named beneficiary when you pass. However, some annuity providers are able to offer a joint and survivor option, a guarantee option or a cash back option.
A term-certain annuity provides you with guaranteed income payments for a fixed term. Typically, if you pass before the term is over your estate or beneficiary will continue to receive the guaranteed payments or receive the balance as a lump-sum
A variable annuity is when your annuity provider invests your money in products that have variable returns. Your payment from a variable annuity is made up of a fixed and a variable portion. The fixed portion will typically be lower then a non-variable annuity provides; however the variable portion can earn you more or less money depending on the markets performance.
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