Deferred Annuity For Retirement

Whichever annuity policy you purchase, essentially there are two ways of payouts, either immediately or deferred. The meaning of defer is to hold back, postpone or delay, which suggests the payout of this policy will be later some time in the future, normally 12 months after the buyer purchased the policy. On the other hand, the immediate type suggests the payout is immediately or in short time.

This is a type of personal account intended for long-term savings, such as retirement. If the buyer purchases it early the premiums will be invested by the insurance company during the savings accumulation period, the premiums will be very much cheaper.

Annuity has two phases, the savings and investment phase, the earnings of the first type accumulate tax-deferred, and for the income phase the buyer can receive regular payments for his lifetime. They normally allow withdraws during the savings and investment phase, and entering into the income phase is optional.

Fixed deferred and variable annuity

Fixed deferred offers lower risk and lower growth, variable offers more growth in return but at a higher risk. Variable offers investment with more flexibility, the value will fluctuate depending on the investment performances.

Fixed deferred provides the buyer with a guaranteed rate of return, the idea is like instead of putting the money into the bank the buyer invests it in the market that manages by the insurance company. The buyer will get a fixed return, he gets the return as long as he lives, rather than one or two years term, and the interest rates vary over the years and payout varies from company to company. Therefore, the insurance company chosen should be reliable and highly rated and must be secure.

Advantages

Some of the advantages are tax-deferred growth, withdrawal allowances, and higher return of the investment and bonus retirement options.

Annuity is designed for retirement, it can provide retirement income, but there are many types of annuity [http://www.indianapolislifeinsurance.net/annuity.html], please visit http://www.indianapolislifeinsurance.net for more. 

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