Financial Web
> Group Life Insurance
> Lowering Your Life Insurance Rates
> Choosing Individual and Family Health Coverage
> Preparing for Your New Motorcycle
> You CAN Lower your Premiums
> Finding Affordable Health Insurance
> Policy Continuation Options
> Bundling your Insurance with one Company
> The High Price of Health Insurance
> Is your Homeowners Insurance Sufficient?
> Permanent or Term Insurance: Which should you choose?
> The Necessity of Health Insurance
> Buying Homeowner's Insurance: A Process
> Sports Car Insurance
> 15 Ways to cut Your Medical Costs
> A Few Words About Dental Insurance
> Annuities
> Auto Insurance - What do You really Need?
> Annuity Options
> A Life Insurance Primer
> Beware of Unfair Trade Practices
> Blended Life Insurance
> Be Aware of these Life Insurance Clauses
> Blue Cross and Blue Shield
> Beneficiaries and the Uniform Simultaneous Death Act
> Consolidated Omnibus Budget Reconciliation Act (COBRA)
> Credit Insurance
> Comparing Life Insurance Policy Costs
> Coordination of Benefits
> Control what You Can
> Characteristics of Insurance Contracts
> Compare when Buying Auto Insurance
> Disability Insurance
> Disability Insurance for Businesses
> Endowments
> Examining Annuity Premiums
> Flexible Life Insurance Policies
> Glossary of Insurance Terms
> Government Health Insurance
> History of Insurance
> HMO vs. PPO
> How Your Insurance Premiums are Calculated
> Homeowners Insurance
> Insurance Beneficiaries
> If You’re Involved in an Accident…
> Immediate and Deferred Annuities
> Insuring Your Teenage Driver
> Insuring Your New Motorcycle
> Know your Car Insurance Policy
> Long-Term Care (LTC) Insurance
> Life Insurance in Business
> Life Insurance in Business - Part 2: Partnerships and Corporations
> Life Insurance in Business - Part 3: Corporate Life Insurance Strategies
> Limited Policies
> Life Insurance is Your Property
> Major Medical Insurance
> Medical Savings Accounts
> Medicare
> Medicaid
> Medicare Advantage Coverage
> No Health Insurance?
> Optional Disability Insurance Benefits and Riders
> Other Types of Annuities
> Paying for Dental Care
> Pass on these Insurance Offerings
> Payment of Claims
> Prepaid Dental Plans
> Rental-Car Insurance
> Rating the Risks
> Some Insurance Riders
> Some Whole Life Policies
> Sufficient Insurance for your Needs
> Specialized Life Insurance Policies
> Some LTC Specifics
> Some Common LTC Policy Provisions
> Settlement Options for Annuities
> Save on Your Homeowners Insurance
> Types of Life Insurance
> Term Life Insurance
> The 10 Best Ways to Lower Your Car Insurance Bill
> The Basics of Underwriting Insurance
> Things to Remember When Buying Healthcare
> Ten Questions for Your Managed Care Plan
> Types of Term Policies
> Types of Insurance Providers
> Taking more Responsibility for your own Health Care
> Underwriting Group Policies
> VA Health Benefits
> Variable Annuities
> Workers Compensation
> Your Health Insurance - What You’re Paying
> Your Health Insurance - and what it should Cover

Annuities

Although advertised as insurance, annuities are an investment product sold by life insurance companies, brokerage firms, mutual funds, banks and financial planners. It promises to pay a specific sum periodically for a specified number of years. For example, you could purchase an annuity that promises to pay you $2,000 a month for 30 years. Or you might be interested in buying an annuity for retirement income which will begin 15 years from now. The cost of annuities varies depending upon your age, sex, the number of lives that will be covered, the date that payments are to begin, and the method used to distribute the benefits.

Insurance companies offer annuities that can make annual or monthly payments which begin immediately, or at a specified date in the future. If you’re near retirement, an immediate annuity, which begins making monthly immediately, may be of interest to you. Purchasing this type of annuity requires that you pay the full cost of the annuity in a single up-front lump sum. For example, a $150,000 payment may purchase a $1,400 per month annuity for as long as you live. A larger up-front payment will purchase an annuity that pays a larger monthly income. An immediate annuity may be an attractive choice for someone who has accumulated a large reserve of funds that he or she would like to convert into a lifetime income.

Deferred annuities begin making payments on a specified date in the future. Let’s say that you want to receive monthly payments of $1,200 beginning in 25 years, when you expect to retire at age 65. A deferred annuity can be purchased by making either a large one-time up-front payment to the insurance company (say, $50,000, for example), or by making a series of much smaller monthly or annual payments. The insurance company, in turn, promises to provide you with monthly income payments of $1,200 for the rest of your life, beginning at age 65.

Variable annuities offer the advantages of investing in mutual funds (potentially high returns, diversification, protection from inflation, etc.) along with the added advantage of deferring taxes on investment income. Variable annuities make periodic payments that can vary in size depending on the performance of the assets in which the funds are invested. Typically, payments into a variable annuity are invested in common stocks or a combination of common stocks and bonds. The performance of those markets determines the return that’s earned by the annuity’s invested funds. The higher the return, the more rapidly the annuity’s pool of savings grows, and the greater the size of the payments that will eventually be received by the annuitant. However, variable annuities also have the possibility of reduced payments to the annuitant if the value of the investments that the annuity’s funds are in declines. Financial experts, therefore, advise that when considering the purchase of a variable annuity, you check the investment history over a period of ten to twenty years or more.

Annuities generally shield investment income from taxation until funds are paid out to the annuitant. Thus, annuities provide tax deferral rather than tax savings. However, early withdrawals are treated in the same manner as those of an IRA, which means that they could be subject to a ten percent penalty.