Annuities are gaining a lot of publicity nowadays, as viable means of investment for people after their retirement. When people retire, they get some packages from their employers for their long years of service and dedication to the company. These packages are bought by insurance companies, and in return, annuities are sold to the retirees. These annuities will pay the retiree a fixed sum on a monthly basis. After a specified period of time, known as the surrender period, the annuity will get matured like an ordinary insurance policy, and that is when the retiree can take back the annuity amount.
There are two different types of annuities that need to be considered here. The following are descriptions of these types, which will help you in doing the annuities reviews when the time comes.
Fixed Return Annuities
As the name suggests, the fixed return annuities pay out at a fixed rate per month. The rate of return is pre-decided when the annuity is purchased, and that rate will remain fixed until the surrender period. Annuitants like the security of a fixed return rate, so that they can manage their expenses in a much better manner.
Then, fixed return annuities have the benefit of tax-deferred payments. As long as the annuity is not withdrawn, it will not be subject to any tax. That is a great advantage for tax-related savings. Money that would otherwise get deducted for tax will remain with the annuitant till the annuity is surrendered at the end of the term.
Fixed return annuities also have death benefits. In case the annuitant dies before the annuity is surrendered, then the annuity is given to the survivors of the deceased annuitant, along with any accumulated earnings.
Variable Annuities
Variable annuities are much the same as fixed return annuities. They also have features such as death benefits and tax-deferred payments. So, in that way, there is no difference between the two kinds of annuities.
However, variable annuities differ from fixed return annuities on one important point. People with variable annuities can control where their annuity value will be invested. Hence, they can take some risks, and using their acumens, they can also make higher returns than people with fixed rate annuities can. Variable annuities are much better for people who want to control their own investments and ensure that they get better returns at the end of the day.
In conclusion, we can say that both fixed rate annuities and variable annuities are great as post-retirement investments, and both can provide tax-deference and death benefits. But while the fixed rate annuities are for the more conservative investor, who wants a fixed return, the variable annuity is for the risk taker, who is confident of using his or her own skills to get better returns.
Author Resource:-
Retire wealthy and on-time with annuities. The most overlooked investment vehicle. For more information and annuities reviews visit http://www.annuitiesreview.com authored by Kip Goldhammer
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