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Annuities Insurance

Today we have an increasing need to build wealth for our future retirements needs. The population in the United States is graying at a pace faster than ever before, putting an increasing burden on Social Security and Medicare. Defined benefit pension plans are quickly disappearing. Workers are living longer and incurring higher medical expenses than previous generations . As a result, saving for retirement has become more important than ever. Yet, many consumers are not maximizing the opportunities available to save.

What is an annuity?

An annuity is a contract issued by a life insurance company that provides a payment at some future time. An annuity contract must comply with judicial and regulatory requirements and Internal Revenue Code provisions to qualify for the preferential tax treatment given to annuities.

What are annuities used for?

Annuities can be used for many distinctive purposes depending on the type of annuity purchased. Annuities may immediately provide owner-annuitants, a guaranteed income stream for a certain number of years, or for life. They may be used to accumulate income on a tax-deferred basis or provide a guaranteed or partially-guaranteed retirement income. They may be used to reduce the longevity risk (risk that one may outlive assets) in a portfolio. Various riders may be used to provide death benefits for beneficiaries after the owner-annuitant dies.

Different types of Fixed Annuities

Equity Indexed Annuity: This type of an annuity promises a basic rate of interest and also worth is determined by a specific stock index performance.

Market-Value-Adjusted (MVA) Annuity: This type of an annuity offers a fixed time period and interest rate and also allows the investor the freedom to withdraw money before the end of term period. The MVA is made based on change in interest rates.

Single Premium Fixed Annuity: As the name suggests, a one-time premium is to be paid and no adjustments can be made.

Flexible Premium Fixed Annuity: After the initial premium is made, the flexible premium fixed annuity allows additions to be made. The initial premium for the flexible premium fixed annuity is usually lower than for the single premium fixed annuity.

Immediate Fixed Annuity: The immediate fixed annuity provides a regular income that begins soon after the premium is paid.

For more information on the different annuities listed above, please contact Charlotte Lyons, Director of Life, for more information or with questions via 678.990.3670.

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