What Is an Annuity?
An
annuity is a contract between you and an insurance company. The insurance
company invests your money for you, and, depending on your annuity, you
may receive a regular payment based on the success of the investments.
Income on annuities is not taxed until withdrawn from the contract, making
annuities a tool to save for retirement.
The Two Main Types of Annuities
Fixed
Annuities
A fixed
annuity provides a guaranteed interest rate* for a fixed period of time.
Here’s how it works: You give a check to an insurance company, and they
invest it. The interest rate you are paid will be periodically adjusted up
or down, but it will never go below the guaranteed rate. As a result, you
will always receive a guaranteed minimum level of return.
Variable Annuities
A variable
annuity is a contract with an insurance company where you give them either
a lump sum or series of payments—and they return your money, usually after
retirement, with a steady stream of payments. In the meantime, your money
is invested and is free to grow, tax deferred, until you take the money
out. Variable annuities provide more options for investing your money, so
potential returns are higher than fixed annuities, but the risk is also
greater.
Annuities Tampa Bay Florida
