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Stop Chasing the Market with an Annuity

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An Annuity can set you Free

Many investors who have grown tired of chasing profits in an unstable market have instead elected to pursue a guaranteed return through the use of an annuity. The general idea behind an annuity is relatively simple. The individual purchases an annuity from a financial services company that, in the United States, is required to be a life insurance provider. In return, the provider of the annuity promises to pay an annual sum of money to the beneficiary for as long as they live.

There are a number of annuity variants that work off the basic concept but are tailored in different ways.

The Basic Types of Annuity Contract Variants

• The basic annuity, also known as a life annuity, can be modified into a life-with-period-certain annuity. This is done so that the annuity will continue for a number of years in the event that the beneficiary dies before the guaranteed period, which would result in a serious financial loss to the estate.

• A slightly different approach for an annuity with period certain is for an annuity that only runs for a fixed number of years regardless of how long the beneficiary lives. Such a policy is generally used in exceptional cases where someone might have a large payment to make over a fixed period of time and wishes to insure that they will always be able to make it.

• Another variant is the survivorship annuity, wherein the annuity will continue to be paid out to the spouse of a deceased beneficiary so long as he or she continues to live.

•  A deferred annuity is one that operates somewhat along the line of an IRA, where the individual pays into the annuity on an annual basis for a number of years to fund it with some tax advantages included, and he then draws off the annuity the same as a regular life annuity once it is vested.

Regardless of market conditions, the insurer is obligated to make the payments regardless. This liberation from the need to invest one’s money wisely represents one of the chief attractions of an annuity to an investor.

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