The Ultimate Guide To AnnuitiesYour One-Stop Resource for Retirement
What are the different types of annuities?
The first thing to do is to learn the concept of an annuity. An annuity is a contractual insurance product that, as we said, are sold by financial institutions. The annuities are designed to provide a steady income for a period, therefore they are such an important strategy to keep in mind during the retirement planning process.
The incomes provided by annuity would depend on several factors like the time we take to pay it and the conditions in the purchase of the annuity and the type of annuity we’re buying (fixed annuity or variable annuity). The way an annuity works is simple: We invest in an annuity and it will make payments to us in a future date. These payments can be monthly, quarterly, annually or a unique payment with the whole amount.
Think of annuities as a reverse life insurance: life insurance once the insured person dies while annuities will pay while they’re alive. This quality makes them a good vehicle to improve the performance of our retirement plan.
Annuities can be tremendous tools to boost the performance of our retirement plan but it could also mean a problem for some people because of its costs. That’s why is so important to research and understand the implications of buying an annuity to know if it’s really the right strategy for our conditions and the goals of our plan.