TYPES OF ANNUITIES
When it comes to annuities, they can be structured to a wide variety of details and factors, such as the duration of the time that the payments from the annuity can be guaranteed to continue. Annuities can be created so that payments continue as long as either the annuitant or their spouse (if survivorship benefit is elected) is alive. Also, annuities can be structured to pay out funds for a fixed amount of time, such as 20 years, regardless of how long the annuitant lives.
IMMEDIATE AND DEFERRED INCOME BENEFITS
Annuities can begin immediately upon deposit of a lump sum, or they can be structured as deferred benefits.
Immediate Annuity begins paying immediately after the annuitant deposits a lump sum.
Deferred Income Annuities on the other hand, don't begin paying out until after the initial investment. Instead, the client specifies age at which they would like to begin receiving payments from the insurance company.
Depending on the type of annuity you choose, the annuity may or may not be able to recover some of the principal invested in the account. In case of a straight, lifetime payout, the payments simply continue until the beneficiary dies. If the annuity is set for a fixed period of time, the recipient may be entitled to a refund of any remaining principal or their heirs, if the annuitant has deceased.
FIXED AND INDEX ANNUITIES
Fixed Annuities provide you with a guaranteed interest rate on your initial premium deposit. Someone who desires guarantee and a guarantee and a guaranteed rate of interest would embrace a traditional fixed annuity. Fixed annuities pay the same income payment at regular intervals for the entire duration of the pay period.
Index Annuities are a good choice if you want the opportunity to earn indexed interest, but don't want to risk losing money in the market. An indexed annuity offers investors the potential to participate in some of the upsides of the stock market. If the markets perform well, you'll make money. If the market doesn't perform and takes a dip, you'll receive a fixed rate of return or no loss of your original investment instead.
*Other riders may be purchased to add a death benefit to the agreement or to accelerate payouts if the annuity holder is diagnosed with a terminal illness.