What to do with your annuity
Posted on March 12, 2008 at 9:50 pm by Sherri R
What is an annuity and what exactly can be done with them now or in the future? An annuity is a series or stream of payments that usually comes from an insurance company. The person receiving the payment is called the “annuitant” and the contract is usually paid on a monthly basis. Annuities are set up to guaranteed amount of money in the future payments spread out over years, usually for life. There are several different types of annuities and each one has specific advantages. Deferred annuities are used for long term investment and can either be fixed or variable. As the names suggest the fixed annuity is a set interest rate that is paid out over time while a variable can fluctuate with the investments made and are slightly higher in their risk. The nice thing about deferred annuities is that they accrue tax free which help them compound their value much quicker than other types of annuities. The other type of annuity is Immediate annuities. As the name implies they begin paying you an immediate income and last for a specified time. They are often used by companies as part of the retirement package and pension plan. With any investment there is also a certain level of risk and it is best to check the history of the insurance company and the types of investments that have made and their track record on investments. Your annuity will be worth nothing if the company that you elect to invest with goes out of business.
If you have invested in a deferred annuity and need the cash sooner than later you can have the option to sell annuities back to companies like Settlement Capital that can help people realize their future payments earlier. These situations come up when a person or family needs to have additional cash earlier instead of pushing that value off into the future. - For those looking to sell annuity earlier to realize an immediate cash flow can check with Settlement Capital on the tax responsibilities if you have a deferred annuity that has been tax free.