If you're considering a variable annuity, this article will provide you with the information you need to gain an understanding of these investments and hopefully, help you to make a good decision about these investments.
As with any annuity insurance, a variable annuity is a contractual agreement between an investor and an insurance company. The investor provides an upfront payment - either one time, or instalments.
The investor then receives payments consisting of a portion of the principal as well as the interest earned by said principal on an ongoing basis. These payments may continue for life or for a set period of time as stipulated by the contract.
With a variable annuity, you decide how to invest the money that you have placed with the insurance company. There will be a list of pre selected funds ranging from highly aggressive stocks to conservative bonds and you choose how you wish to invest.
A variable annuity provides you with similar flexibility of having your money outside of the annuity, but with the tax deferral advantages of an annuity
Variable annuities generally also include an option to convert the annuity to a fixed annuity. During the life of the annuity, the investor may choose to keep their payments invested in stocks and bonds, with the value of their investment fluctuating with the markets. Alternately, the investor can opt for a fixed interest rate if they would prefer to avoid the risks of the stock market.
You can also allocate a section of your payout to any fixed account that will render you a fixed interest rate. So even if you keep shifting your investment you need not be paying any tax on the income gains until you receive payment. In the payment phase, you could be getting your payments and gains as a lump sum or if you wish so, you could stagger it as a range of regular payments.
Generally speaking, investors do very well with a variable annuity invested in the major US markets. Though there is always some risk involved with investing, most economists and financial experts regard stocks as a solid investment which provides flexibility and tax deferrals.
Before deciding on a variable annuity, investors do need to keep in mind that there are costs associated with these annuities which can be upwards of 3%. You'll want to make sure that you understand both the costs and benefits before choosing variable annuities as a way to invest. - 31884
As with any annuity insurance, a variable annuity is a contractual agreement between an investor and an insurance company. The investor provides an upfront payment - either one time, or instalments.
The investor then receives payments consisting of a portion of the principal as well as the interest earned by said principal on an ongoing basis. These payments may continue for life or for a set period of time as stipulated by the contract.
With a variable annuity, you decide how to invest the money that you have placed with the insurance company. There will be a list of pre selected funds ranging from highly aggressive stocks to conservative bonds and you choose how you wish to invest.
A variable annuity provides you with similar flexibility of having your money outside of the annuity, but with the tax deferral advantages of an annuity
Variable annuities generally also include an option to convert the annuity to a fixed annuity. During the life of the annuity, the investor may choose to keep their payments invested in stocks and bonds, with the value of their investment fluctuating with the markets. Alternately, the investor can opt for a fixed interest rate if they would prefer to avoid the risks of the stock market.
You can also allocate a section of your payout to any fixed account that will render you a fixed interest rate. So even if you keep shifting your investment you need not be paying any tax on the income gains until you receive payment. In the payment phase, you could be getting your payments and gains as a lump sum or if you wish so, you could stagger it as a range of regular payments.
Generally speaking, investors do very well with a variable annuity invested in the major US markets. Though there is always some risk involved with investing, most economists and financial experts regard stocks as a solid investment which provides flexibility and tax deferrals.
Before deciding on a variable annuity, investors do need to keep in mind that there are costs associated with these annuities which can be upwards of 3%. You'll want to make sure that you understand both the costs and benefits before choosing variable annuities as a way to invest. - 31884
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