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Annuities

Annuities Are A Valuable Retirement Tool If Used Properly

An annuity is a contract with an insurance company under which you make either a lump-sum payment or payments over time in a series. The insurer agrees to make payments according to the contract back to the holder. Annuities typically offer a source of tax-deferred growth of earnings. Some annuities include a death benefit that pays a guaranteed minimum amount to the beneficiary.  Annuities can be a very useful tool as an insurance strategy for wealth accumulation.

Annuities should be considered with the following goals as possible financial advantages.

►the potential of tax-deferred growth

►fixed rate of return security

►a life-time income stream

►a range of diversified income

►can chose beneficiary

►potential of unlimited contributions

►great Asset Protection tool

There are two basic types of annuities.

Fixed Annuity:
In a fixed annuity, the insurance company guarantees that the beneficiary will earn a minimum rate of interest during the time that your account is growing. The insurance company also guarantees that the periodic payments will be a guaranteed amount per dollar in your account. These periodic payments may last for a definite period, such as 20 years, or an indefinite period, such as your lifetime or the lifetime of you and your spouse.

Variable Annuity:
A variable annuity allows the beneficiary to invest the purchase payments from a range of different investment options, typically mutual funds. The rate of return for the beneficiary depends on the performance of the investment.

Equity Indexed Annuity:
During the accumulation period of making payments, the insurance company credits the beneficiary with a return bases on charges in an equity index. The insurance company generally guarantees a minimum return.

  
Variable annuities are securities regulated by the SEC. Fixed annuities are not securities and are not regulated by the SEC.

Annuities can also be divided into two tax categories.

Tax Dereferred Annuity:
A tax-deferred annuity provides an additional long-term tax-deferred savings opportunity to help the beneficiary prepare for your retirement years with the opportunity to generate an income stream in retirement.

Income Annuity:
An income annuity can help cover essential expenses and create a pension-like stream of income for a certain time or the remainder of the beneficiary’s life. It is also the only product that can guarantee retirement income for life, by converting a portion of the beneficiary’s retirement savings into a reliable income stream. 
Loopholes to watch out for in Annuities:

►cautionary tax situations may exist

►limited liquidity may exist

►excess withdrawals may have penalties

►you may have to limit contributions

►dollar-cost averaging and periodic investing do not ensure a profit or protect your investment in a declining market

Recommended Products

Special Needs Trust $300
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Medicaid Qualifying Trust $750
This is an add on provision. The Medicaid Qualifying Trust is an income-only, non-discretionary "subtrust" of a Revocable Living Trust. It must be funded on a timely basis during the trust grantor's lifetime to be effective.

Married Person Qualified Terminable Interest Property (QTIP) RLT $1700
A Sole-Grantor trust designed for a married individual to hold and manage, as an individual grantor, his/her sole and separate property and any one-half undivided interest in marital (community & tenants-in-common) jointly-held property in the trust.

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