When you are planning to earn a long-term financial goal, one of the most effective moves is to avail of a fixed annuity rate. It is considered to be an important part of any financial strategy that is recommended by a financial planner or a financial advisor. A lot of people who are familiar with the concept of insurance which secures an individual’s loved ones if an untimely death will occur and also it helps an individual’s taxes in a way it upkeeps in one estate. Annuities are primarily functions to protect and secure a person’s financial goal beyond the working years.
In the world of finance and insurances, there are several types of annuities a person can avail; these are immediate annuities, deferred annuities, fixed annuities, variable Annuities, and financial planning with annuities. In this article, let me show you the differences, functions, and uniqueness of these annuities that might help you figure out which of this you are planning to take up to help achieve your financial goals or for further information, you can visit our website by clicking on this link.
· Immediate Annuities- This is considered as the most basic form of annuity which is purchased in a whole and it will implement payments as soon as it will be generated into the life insurance company’s system. The immediate annuity offers an interest to the insurance policyholder which in return will help preserve the value of the annuity to avoid inflation through liquid investments such as government-guaranteed bonds. An immediate annuity is usually utilized by a person who does not want to spend any financial assets or funds spontaneously or immediately but it will be secured and saved for future uses. For example, a person who has a large fund in his or her insurance policy could transfer it to an annuity in the event of death to his or her loved ones through monthly withdrawal.
· Deferred Annuities- Deferred annuity meanwhile can be bought in two payments from a life insurance company or in even several payments that can be stretched over a period of the timeline. The contract of this type of annuity can be stipulated until it is fully mature on the date that it will be used. Once it becomes mature, the annuity’s holder or issuer can begin making payments to the life insurance company and once the payments have already rolled in, the holder will be prohibited from contributing further but there are options and terms the holder can exercise such as providing an interest which in return will help maintain the increasing payout amounts of the holder.
· Fixed Annuities- it provides the holder a fixed interest rate and a common guarantee of return of the contributions if the annuity contract has a rate of return. This kind of annuity is used for investment purposes such as government secured bonds or commercial papers.
· Variable Annuities- Variable annuity comes in many forms and types but functions the same. People who avail this kind of annuity will be contributing their funds to an investment account but these funds won’t be used entirely but only portions of it and once the annuity matures, it will be used to increase the rates of return.
· Financial planning with annuities- If a person is planning for a long-term implication of his or her annuity, they should consider a strong financial plan so that their annuity will be protected and also take advantage of the annuity products available. In this way, the holder will have the ability to provide an income to increase the rates of return.