An annuity is a contract between two parties; one of them is usually an insurance company that will provide regular payments at a specified date. Since the total of payments exceeds the amount paid into the contract, it is important to get the best annuity rates possible. Here are some suggestions to get the best annuity rates.
Retirement requires an enormous amount of cash. Even for a modest income, with greater longevity and inflation, the pool of money required to generate that income is very large. Even with the best annuity rates, you will need some time. The earlier you start, the easier it will be; the extra time will help you recover from downturns and allow more flexibility to invest in lower risk, high security investments. An annuity is an example of this kind of investment.
When it comes to investments, you need to be careful about the risks involved as this is a tough job to manage in the long run as it concerns your future, which has to be dealt with utmost seriousness and wealth management is no laughing matter especially when retirement is just around the corner.
Using the internet to quickly shop for the best annuity rates without the pressure of a salesman would seem to be a no-brainer. Calculators for annuities are also online and can give you a realistic picture of the challenges facing you as you plan for your retirement or future event. They will also assist you in determining the timing and distribution percentages of your annuity. Even more importantly, the best annuity rates are going to be useless unless a strong, reputable firm is behind the contract. The internet provides a way to access information about a company’s strength and business practices.
Annuities generally take a form similar to life insurance; in fact, a life insurance policy can be considered a type of annuity. Instead of regular payments, a life insurance policy offers a single payment. Like these, an annuity may also offer a death benefit to a beneficiary. Depending on the type and terms of the annuity, proceeds from it may have tax advantages the same way other insurance policy proceeds are non taxable. Your tax advisor and annuity professional would be the best source of information about this.
When it comes to obtaining the best annuity rates, you will want to consider whether you wish to purchase a deferred or an immediate annuity. A deferred annuity is an annuity that operates like a regular retirement account; regular payments are put into it and beginning at a specified date, regular distributions start. Depending on the length of the deferment, these proceeds may be non taxable. An immediate annuity is one where the entire purchase price of the contract is paid up front, and payments begin immediately. Many state lotteries use this method to pay winners their jackpots. Because there is no deferment, these proceeds are usually taxable. Don’t forget to calculate tax impact as that may prevent you from realizing all that the best annuity rates have to offer.