The Annuity Expert | Retirement And Insurance

Annuities 101 — What They Really Are & When They Make Sense
An annuity is a contract with an insurance company where you pay either a lump sum or installments in exchange for future income. It’s designed for long-term planning, not short-term savings, and it isn’t FDIC-insured.

Annuities have two phases. During accumulation, your money grows tax-deferred. Fixed annuities credit set interest, indexed annuities link growth to a market index with protection, and variable annuities invest in funds with market risk. During payout, you can receive income for a set period or for life. Many modern contracts also include a Guaranteed Lifetime Withdrawal Benefit that provides lifetime income without giving up control.

Every contract involves an owner, annuitant, and beneficiary. Types include fixed, indexed, variable, immediate, and deferred annuities. Each offers different balances of risk, growth, and flexibility.

The benefits include tax-deferred growth, lifetime income, and death benefits for heirs. On the downside, annuities can have surrender charges, fees, complexity, and limited liquidity. Income may not always keep up with inflation, and some contracts lock in rates that later become uncompetitive.

Annuities are most useful for people nearing or in retirement, high earners seeking extra tax deferral, and those worried about outliving their money. They may not be a fit for younger investors needing growth and liquidity, or those who haven’t maximized IRAs or 401(k)s.

Because insurer terms and features vary widely, it’s critical to compare annuity options before buying. For a full breakdown, see our page on annuity basics
. When you’re ready, contact The Annuity Expert for free quotes and side-by-side comparisons.

3 months ago | [YT] | 0