Classification of
Annuities
Annuities may be classified in numerous
approaches.
Based on the time annuity payments start:
Immediate Annuities
-
The insurance provider instantly
commences payments for life or a specific number of time in return on your one-lump-sum
contribution.
-
Routine payments will be obtained on a regular monthly, quarterly,
half-yearly or yearly basis.
-
A part of every payment signifies taxable interest, along with the
other portion which is a tax-free return of the principal.
Deferred Annuities
-
May be funded via just one payment or via flexible premiums over
the years.
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May possibly assist you to build up cash for retirement living,
particularly over a prolonged amount of time.
-
Your cash will grow tax deferred, which usually signifies you do
not have to pay taxes on returns until you take out your cash
ultimately.
Based on the premium payment approach:
Single Premium Annuities
-
May offer you a method to turn a big amount of money into
guaranteed source of income.
-
For people who have money from an inheritance, business sales,
legal settlement, and so on can fund a deferred or an immediate
annuity.
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For individuals approaching retirement, who possess assets built
up in a retirement plan or any other savings tools, can fund a
deferred or an immediate annuity.
Flexible Premium Annuities
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Funded over a time period, usually many years.
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Make it possible for you to pay monthly premiums of varying
amounts (within a mentioned lowest and highest) on a fixed schedule
or at random.
-
Your assets built up are all tax-deferred.
-
May fund both fixed and variable deferred annuities.
Based on the place assets are invested:
Fixed Annuities
Variable Annuities
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Offer you a better chance for asset growth via various investment
options.
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With their better chance for growth, comes higher risk.
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