The Experts Speak: 3 Viable Alternatives to Owning Annuities

The Experts Speak:  3 Viable Alternatives to Owning Annuities

Municipal Bond Funds These funds are an attractive option for retirement savings. The income they produce is exempt from federal and in many cases state income tax (although the sale of the bonds may result in taxable capital gains or losses, and some municipal bonds may be subject to the alternative minimum tax). If a municipal bond fund’s average yield is 3 percent, the equivalent taxable yield is almost 4.3 percent if the investor is…

Read More

6 Drawbacks of Annuities

6 Drawbacks of Annuities

Annuities are investment vehicles that are designed to offer a stream of income for a specified period of time. Annuities have a number of benefits including a guaranteed income for life and tax-deferred growth. This article will cover 6 disadvantages to be considered before owning an annuity. Receipt of a lump sum (either at retirement, or to a beneficiary at death) could result in a significant tax burden because income averaging is not available (however,…

Read More

7 Advantages of Annuities

7 Advantages of Annuities

Annuities are investment vehicles that are designed to offer a stream of income for a specified period of time. Annuities have a number of benefits including a guaranteed income for life and tax-deferred growth. This article will cover 7 major advantages to owning an annuity. The guarantees of safety, interest rates, and particularly lifelong income (if selected) give the purchaser peace of mind and psychological security. An annuity protects and builds a person’s cash reserve….

Read More

9 Circumstances When to Consider Annuities

9 Circumstances When to Consider Annuities

The risk and return characteristics of fixed and variable annuities are so fundamentally different that each type is more or less suitable for various purposes. However, some form of annuity would be indicated in the following circumstances: When investors want a retirement income that they can never outlive. When investors (often retired) want a monthly income equal to or higher than could be generated by other conservative investments and are willing (or especially if they…

Read More

Fixed Annuities vs. Variable Annuities

Fixed Annuities vs. Variable Annuities

In addition to differentiating between immediate and deferred annuities and fixed-period and term-certain payouts, insurers also categorize annuities as to whether they are fixed or variable. (Be careful not to confuse a fixed annuity with a fixed-period payout.) Classification as a fixed or variable annuity refers to the underlying investments during the accumulation phase of the annuity: A fixed annuity is invested in the general fixed account of the insurance company. A variable annuity is…

Read More

Our Experts Explain the Difference Between an Owner-Driven and an Annuitant-Driven Annuity Contracts

Our Experts Explain the Difference Between an Owner-Driven and an Annuitant-Driven Annuity Contracts

The differentiation between owner-driven versus annuitant-driven contracts addresses the consequences of the death of an annuitant during the accumulation phase of a deferred annuity. In the past, almost all contracts were annuitant-driven, but recently some contracts are occasionally owner-driven. It is important to read the details of the annuity contract to determine which type of contract is being evaluated or is in force. Under the classic model of an annuitant-driven contract, if the annuitant were…

Read More

Life Annuities vs. Fixed Payout Annuities

Life Annuities vs. Fixed Payout Annuities

If the payout phase of the annuity is a life annuity, the company promises that payouts will continue for as long as the annuitant (or annuitants) lives; the annuitant(s) can never outlive the income stream. (Note: technically, although, the owner of the annuity and the annuitant typically are the same person, occasionally the owner and the annuitant are different individuals.) If the payout phase is a fixed-period annuity (also called a term-certain annuity), the company…

Read More

Immediate Annuities vs. Deferred Payout Annuities

Immediate Annuities vs. Deferred Payout Annuities

If the specified date for payouts to begin is within one year of the date the contract is established (i.e., a single cash payment is made and the insurance company begins a systematic liquidation of the payment back to the owner within one year), the annuity is called an immediate annuity. If, alternatively, the specified date for payouts to begin is later than one year, the annuity is called a deferred annuity because deposits are…

Read More

The 2 Main Phases of Annuities: Accumulation and Payout

The 2 Main Phases of Annuities:  Accumulation and Payout

Annuities are the only investment vehicles that can guarantee investors that they will not outlive their income, and they do this in a tax-favored manner. In addition, annuities are available with a host of features to meet a wide variety of investor needs. Below is a brief description of the various types of annuities that are available.  Accumulation and Payout Phases Technically, annuities are contracts providing for the systematic liquidation of principal and interest in…

Read More

What is a Temporary Life Annuity?

What is a Temporary Life Annuity?

A temporary life annuity is one which provides for fixed payments until the earlier of the death of the annuitant(s) or the end of a specified number of years. To compute the annuity exclusion ratio, expected return is found by multiplying one year’s annuity payments by a multiple from the appropriate IRS annuity table. Reproduced with permission.  Copyright The National Underwriter Co. Division of ALM

Read More
1 2 3 4