Immediate Annuity
Immediate annuities are an agreement between an insurance company and yourself (the insured) that basically says that you will pay the insurer a lump sum of money in which the insurer will begin making regular payments to you, and will continue to do so for the rest of your life. Immediate annuities start paying right away; at the most within the year after depositing a lump sum of money, after you’ve signed the insurance contract with the insurance company.
Annuities offer a great number of benefits:
Guaranteed Income
your retirement years areguaranteed to have income. No more fears or insecurities about financialinstability or problems. These issues are now guaranteed by the insurancecompany to not happen to you.
Save Time
You don’t have to spend alot of time managing your money to save for your retirement. The insurancecompany invests your money for you and pays you the amount you both agreedon at the same time, each and every month.
No Administration or Transaction Fees
Save time and money without having to pay any transaction fees oradministrative fees which are associated with most other retirementsavings plans.
High returns
The interest rates forannuities are usually quite a bit higher than Certificate of Depositinterest rates or Treasury Rates. A portion of the principal annuity amount is paid to you each month so the payments are greater than the interest you’ve made on your annuity.
Potential to Save on Taxes
Depending on thetype of immediate annuity you chose, you may be able to save on taxes too. A straight life annuity, the most basic arrangement of immediate annuities, yields the most interest for you.
However this may not be the best product for you and your insurance company has other choices that may be better for you. Typically these annuity choices include:
Period Certain
This annuity guarantees to bepaid out over a defined period of time. If you pass away before the timeperiod ends, the funds will be paid to your beneficiaries. The downside tothis is that you may outlive the annuity payments.
Period Certain and Continuous
The income from this type of annuity is greater for your lifetime but if you pass awaybefore the end of the annuity period, your beneficiaries are paid throughto the period end.
Joint and survivor
In this type of annuity,two people receive the full payment each month. If one of them passesaway, the other receives a portion of the annuity payments, which istypically 50 to 75 per cent.
Variable Income
In fixed income annuities(most popular), each monthly payment is the same and pre-determined.However, with a variable income annuity, the monthly payment is based onhow well the investments perform. You can combine fixed and variable, witha guaranteed portion of your monthly payment (a minimum) but potentiallyhigher in the months where the investments perform well.
Annuities
Health Savings Accounts
You can use this account to pay for your qualified health expenses, including expenses that the plan ordinarily doesn’t cover, such as eyeglasses and hearing aids.
Expenses paid out of the HSA that are eligible expenses under your high-deductible health plan will count toward the plan’s deductible.
