Type of Annuities

Non-Qualified Annuity

The difference between a non-qualified annuity and a qualified annuity is its tax treatment. This is a fundamental difference that you must speak with your life insurance advisor or your accountant about to make sure you use the right source of money to buy your annuity. You will see how a non-qualified annuity has a tax advantage over the qualified annuity. A Non-Qualified Annuity is Purchased with After Tax Dollars Put in simple terms, the non-qualified annuity contract is bought with a cheque coming from your bank account. This is why we use the term “non-qualified” as it is not

Fixed Annuity

The fixed annuity (also called a life annuity) contract is the most common type of annuity. The main purpose of this contract is to provide a lifelong income stream to the investor. The investor invests a lump sum of money in exchange of a set of periodic payments (mostly monthly) until the moment of his death.   Example of a Fixed Annuity Mr. Rogers is about to retire. His house is paid and he has some savings aside to insure a great retirement. However, he doesn’t want to see his portfolio value going up and down all the time. He

Term Certain Annuity

There are two types of what we call “fixed annuities”. The term “fixed” come from the payment of the annuity. Therefore, a fixed annuity is offering a fixed… payment. It is usually a monthly income stream that is paid during the time of the contract. This is where the two types of fixed annuities come: Life Annuity and Term Certain Annuity.   Life Annuity The life annuity is paid to the beneficiary upon his death. Once the beneficiary passes away, the remaining part of the annuity is left to the Life Insurance Company. This is a good product for investors

Indexed Annuity

You are looking for a guaranteed stream of income but you are not willing on quitting the stock market returns yet? Indexed annuities may be part of the answer for you. By definition, an indexed annuity investment return is linked to a market index. The most common index is the S&P 500. How Indexed Annuities Are Structured As opposed to fixed annuities, indexed annuities investment return is not known at the purchase time. Your initial investment is secured and you will not lose money through such contracts. There is also a minimum investment return included in indexed annuities. How can

Variable Annuity

You are looking to build your own pension plan with your hard earned money? Some advisers may talk to you about variable annuities. A variable annuity is an investment product where you accumulate your next egg in a tax deferred structure. At the time of withdrawal, you are allowed to buy an annuity generating a steady stream of income. Variable Annuities Structure Variable annuities are nothing like fixed annuities.  The value of payments you will receive at retirement is unknown and not guaranteed. In a variable annuity, the investor selects with the help of his rep a series of mutual

Insured Annuity Annuity

The insured annuity, also called back-to-back annuity, is a combination of two products: a life insurance and a fixed annuity. This product has been created for investors who seek both revenues and a guarantee of capital to be left to their heirs.   Back to Back Annuities Structure As previously mentioned, the back-to-back annuity is a simple combination of a life insurance covering the amount used to buy a fixed annuity.   The idea behind this structure is to provide income to the investor while he lives and still protect his assets to be given to his heirs upon his

Immediate Annuities Vs Deferred Annuities

The term “immediate” and “deferred” comes from the moment where you will start receiving the annuity payment. You can technically buy any types of annuities and make it an immediate or deferred contract. Let’s take a look at their main characteristics.   Immediate Annuities The immediate annuity is also called an income or single premium immediate annuity. The purpose of this transaction is to receive distribution within the same year the contract is purchased. Please note that the purchase of an immediate annuity is irrevocable. This means that one you have agreed to the contract, there are no way back.

Qualified Vs Nonqualified Annuities

Annuities are definitely complex and their understanding comes with a few hours of researches along with learning new terminology. Another term you can hear from your adviser when discussing annuities is “qualified” vs “nonqualified”.  While immediate and deferred annuities relate to the timing of your payments, the terms qualified and nonqualified are linked to the source of money used to purchase the contract. More precisely, the term used is directly linked if you have used savings from your tax-deductible IRA or any other employer-sponsored retirement plan to buy the annuity. The different between the two types of annuities are fairly

Longevity Annuity

When things last forever… The concept of longevity annuities is fairly new to the population as we all didn’t expect to live that long. In the United Stated, the life expectancy for a female is now 81 while male can hope to live up to 76. Nonetheless, it has become more frequent to see older people celebrating their 85th, 90th or even 100th birthday. It is surely awesome to see your children with their children and possibly grandchildren celebrating your anniversary. On the other side, this has a significant impact on your retirement plan if you haven’t think about it.

Joint Life Annuities

From this day until the moment of our death… Life annuities are generally a good product for an investor who is risk averse and doesn’t want to manage his portfolio. The annuity provides a steady income stream until the investor (also called the beneficiary) pass away. At this moment, depending on the type of contract, there may or may not be a remaining balances to be switched to the investor estate. If you retire with your spouse, the perspective of losing a part of your money given to a life insurance company is definitely not appealing. What will happen to

An exclusive design by: ForumSkin.com