Evaluating Annuities

It is generally accepted that a fixed annuity is far less risky than a variable annuity. However, this is not the only consideration when determining whether an annuity is the right investment. Investments in annuities are only as good as the insurance company that is behind them. Many people remember only too well, the problem that AIG had recently. Before you compare annuity income in St. Petersburg, you should investigate the company who will handle your investment as well as their annuity income options. Here are some tips on dealing with both of these.

Evaluating and Comparing Annuities

Before you can properly evaluate and compare annuities, you must know something about the insurance company. Consumers are fortunate enough to be able to tap into some reputable sources of research on insurers and the product they offer. Potential annuitants should look into the insurance company rating, whether the annuity offers premium protection, ask if the annuity offers a cost of living adjustment benefit and whether or not there is a death benefit as part of the annuity.

Comparing annuity income options

Since most people purchase an annuity to help them retire comfortably or provide for their families, it is important to understand the various types of annuity income options. Understanding these options can help potential investors understand the limitations of each type of annuity.

  • Installment payments

    There are two types of installment payment annuity income options. Installments with a fixed amount pays out specific amounts of money until the amount runs out. If the annuitant dies, it continues payment until the funds are exhausted. Installments with a fixed period pays through the annuitants death and their beneficiary collects until the term expires. Terms range from 5 to 20 years.

  • Life annuity options

    There are three types of life annuities that pay income based on specific criteria. The basic life annuity pays until such time as the annuitant dies and no further payments are made. This annuity payment option pays the most. A guaranteed time-period life annuity pays for a guaranteed period of time regardless of whether the annuitant survives the term. Payments after death are paid to a beneficiary or to the estate of the annuitant. A life annuity may also have a refund clause that helps both the annuitant and the insurance company. This type of annuity income is guaranteed for a specific period of time and if the annuitant is still alive continues until their death. Should the annuitant die before the full amount of the premium is paid out, their beneficiary or estate receives the difference between benefits paid and the purchase price.

  • Joint and survivor annuity income options

    Couples often elect a joint annuity income option as it provides them with more flexibility than other annuity income programs. The basic annuity is called “for life” and pays out to both annuitants while both are alive. When one annuitant dies, payments continue as a percentage depending on what was agreed to when the contract was opened. Payout amounts to the survivor range from 50 percent to 100 percent and terminate once the second annuitant is deceased. The termination is automatic regardless of whether the initial investment has been paid. The second joint annuity income option has a guaranteed time period and continues to pay equal payments for a specific period of time and will continue until both annuitants are deceased. Insurance companies are committed to these payments regardless of whether they exceed the amount invested.

Annuities can be confusing and with the various annuity income riders and options, it is important to understand what impact they will have on your long-term financial health.

Advanced Capital Management, Inc. will show you how to lock in better returns on your retirement dollars and provide you with the income you need. You can find out more about how a lifetime income annuity rider works or if a Fixed Index Annuity or Life Insurance would be the right option for you. Click on the orange “Get Annuity Quote” button to the right and see how you can generate more lifetime income for your retirement.

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