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• Sell Annuity Payments
They have become a part of the retirement and investment
plans of many Americans. Before you buy a variable annuity,
you should know some of the basics – and be prepared
to ask your insurance agent, broker, financial planner,
or other financial professional lots of questions about
whether it is right for you.
This is a general description of variable annuities –
what they are, how they work, and the charges you will
pay. Before buying any, however, you should find out about
the particular annuity you are considering. Request a
prospectus from the insurance company or from your financial
professional, and read it carefully. The prospectus contains
important information about the annuity contract, including
fees and charges, investment options, death benefits,
and annuity payout options. You should compare the benefits
and costs of the annuity to other varable anuities and
to other types of investments, such as mutual funds.
A variable annuity is a contract between
you and an insurance company, under which the insurer
agrees to make periodic payments to you, beginning either
immediately or at some future date. You purchase a variableannuity
contract by making either a single purchase payment or
a series of purchase payments.
A variable annuity offers a range of investment
options. The value of your investment as a variabl annuit
owner will vary depending on the performance of the investment
options you choose. The investment options for a varable
annuty are typically mutual funds that invest in stocks,
bonds, money market instruments, or some combination of
the three.
Although variable annuities are typically invested in
mutual funds, variable annuities differ from mutual funds
in several important ways:
First, variable annuities let you receive periodic payments
for the rest of your life (or the life of your spouse
or any other person you designate). This feature offers
protection against the possibility that, after you retire,
you will outlive your assets.
Second, variable annuities have a death benefit. If you
die before the insurer has started making payments to
you, your beneficiary is guaranteed to receive a specified
amount – typically at least the amount of your purchase
payments. Your beneficiary will get a benefit from this
feature if, at the time of your death, your account value
is less than the guaranteed amount.
Variable annuities are tax-deferred.
That means you pay no taxes on the income and investment
gains from your annuity until you withdraw your money.
You may also transfer your money from one investment option
to another within a variable annuity without paying tax
at the time of the transfer. When you take your money
out of a variable annuity, however, you will be taxed
on the earnings at ordinary income tax rates rather than
lower capital gains rates. In general, the benefits of
tax deferral will outweigh the costs of a variable annuity
only if you hold it as a long-term investment to meet
retirement and other long-range goals.
http://www.sec.gov/investor/pubs/varannty.htm
Variable annuities typically offer a range of investment
or funding options. These funding options may include
stocks, bonds and money market instruments. The return
on variable annuities can go up or down. Your principal
and the return you earn are not guaranteed; they depend
on the performance of the underlying investment options.
If the funding options you choose for your annuity perform
well, they may exceed the inflation rate or fixed annuity
returns. If they don't, you may lose not only prior earnings,
but also some of your principal.
Some variable annuities offer, in addition to a range
of investment options, a fixed account option that guarantees
both principal and interest, much like a fixed annuity.
This gives you the option of dividing your money between
the low-risk fixed option and higher-risk vehicles such
as stocks, all under the umbrella of just one annuity.
Many variable annuities offer asset allocation programs
to help you decide where to invest your assets based on
your circumstances.
Variable annuities also allow you to transfer money from
one account to another without triggering a taxable event.
In other words, if you transfer money to a different funding
option within your variable annuity, you will not have
to pay taxes on any earnings you have made. Tax-free switching
lets you re-allocate money to suit changing market conditions,
without worrying about the taxes.
www.totalreturnannuities.com
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