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Deferred Annuities: An Overview |
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Fixed annuities, which refers to the types of annuities that promises a fixed rate of return at specified intervals for a specified time, can be of two types – immediate and deferred. For a fixed immediate annuity the return payment starts as soon as the annuitant finishes paying the total amount of the annuity, while a deferred annuity refers to the one the payment for which will start at a later date chosen by the annuitant. |
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| For any type of annuities, two main phases of depositing money for an annuity and receiving money from it can be demarcated. For deferred annuities, however, it is explicitly identifiable. The buyer of an annuity can pay for the annuity in a lump sum or periodically over some time. In the later case, the phase when the buyer pays the amount for the annuity to the insurance provider is called the savings phase or the accumulation phase. The next phase when the buyer has paid the total amount for the annuity and is receiving the returns from the annuity is called the income or the annuitization phase. |
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| During the accumulation phase you need to plan out your future streams of income as you will like to receive from the annuity, its structures, the time intervals for payments receipt and all other aspects of the deferred annuity. Once you decide and the annuity is contracted, you cannot change it later. You may want to receive the payments from the annuity in considerable amounts within a short time, or small amounts over a period of time, or even till death. Whatever be your choice, it needs to be contracted. During the annuitization period, you simply receive the benefits of the annuity. If the decision was well taken, you relax and enjoy your seniority. A not so well chosen annuity may not fit your case well and you may not get the maximum benefits. It is, therefore, important to understand the features of deferred annuities and make a wise decision. For more information on deferred annuities and expert advice on the best selection, Click here or call AnnuityLibrary.comtoll-free at 1-800-998-4056. AnnuityLibrary. comis an independent and reliable source of information on equity indexed annuity and is referenced by renowned financial organizations and publications. |
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Deferred annuities always come with a tax benefit in the form of deferred tax payment. The income received from deferred annuities is taxed only when the interest earnings are withdrawn. Deferred annuities also insure that the beneficiary nominated by the annuitant receives the benefits from the annuity in the form of returns from the investment as well as the remaining principal amount. |
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