It is important to understand annuities pros and cons before deciding the best place to investment your money. Take the time to figure out how you would like your money to work for you by weighing the facts of annuity products available. Tax deferred annuities, accessibility to your money, higher yields on return, and amount of commission paid to the sales agent are just a few of the issues to investigate to make the best choice possible.
Annuities earnings are tax deferred. The money deposited in this account is not taxed until the money is withdrawn. Preferably the tax rate will be lower at the time of withdrawal for the holder of the annuity. Also, you're accumulated interest is not being taxed away. There are other tax deferred plans on the market like CD's but several annuities have a higher return on your money.
It is wise to consult with your tax adviser about your future tax deferred pay outs. The IRS has rules on how you withdraw your payments from an annuity.
Highest yields on your money is what investing is all about. Immediate annuities earn at a higher rate than other forms of similar types of investments. These funds are not withdrawn at some future date but begin paying out immediately.
Receiving higher yields may not be the best plan for your beneficiaries. Immediate annuities terminate upon the death of the participant and any funds that are left over revert back to the company that sold the policy. Any heirs are left with no inheritance from this plan.
There are withdrawal clauses in most contracts. Surrender Periods can tie up your cash for longer than you want. If you need early access to your funds, there may be penalties for taking out your funds.
There are various fees associated with annuities that require understanding. A low fee account can be very beneficial as an investment. Take the time to work with a knowledgeable agent to decide which options are best for you.
High cost add on sub accounts can be a big waste of your investment. The wrong type of agent can talk you into purchasing a costly policy that is difficult and expensive to get out of. Pay close attention to surrender fees.
Insurance companies sell a large majority of annuities. It is wise to buy from stable, long term companies. The company's are required to be able to show that they can pay on the programs they have sold. But, if the company should go out of business the annuity is worthless.
There are many reputable agents who will help educate you about the best possible annuity plan available. Due to the wide range of contracts it is wise to gather as much information as you can to make the best choice for you.
It's not that there are necessarily good and bad investments but rather, there are different choices that will benefit a variety of people. What type of program to purchase is a matter of understanding the annuities pros and cons and compare them to your unique situation. That is an important key to making the best investment and garnering the best return on your money.
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