annuities

Annuities are basically investment vehicles that are built up through a series of untaxed, equal payments made over a regulated timeframe. (Generally every month or every year) Following the purchase of annuities, you encounter two distinct phases. This first phase, commonly known as the accumulation phase, consists of the process through which you make contributions to your annuities account, accumulating gains that will be tax-free (Untaxed, your annuities account has far greater growth potential) until you enter into the second phase of the annuities process. (At this point, your money is taxed like income) The second phase, commonly known as the distribution phase, consists of the process through which you gain access to your accumulated funds. You can choose to either receive one lump sum or you can choose to annuitize, having the money split into equal payments that are spread out over the course of an agreed upon timeframe. It is your prerogative whether or not you choose the lump sum option or the annuitizing option, the latter being the better choice for those who find themselves working on a month-to-month budget.

When it comes time to select a specific annuity, there are various annuities from which to choose from:

• Variable Annuities
• Fixed Annuities
• Immediate Annuities
• Deferred Annuities
• Gift Annuities
• Retirement Annuities

Annuities consist of 2 main parts, an insurance "cover" and a subaccount. The subaccount is the main investment associated with annuities. (Usually some type of mutual fund) The insurance cover is where the annuitant has the annuities major point defined. This includes points such as whether or not annuities are fixed or variable, whether annuities will be deferred or immediate, whether annuities will have a death benefit, etc. Defining such things is generally considered to be the more confusing part of purchasing annuities.

There are two ways through which you can purchase annuities. Which one is right for you?

1. Single Payment Annuities - A single payment annuity is 1 lump sum to buy a single payment annuity. Once you make your initial agreement regarding the insurance cover of your annuity, you have zero flexibility to make changes.
2. Flexible Payment Annuities - A flexible payment annuity consists of continuous payments that are made during the time intervals of your choosing. (This can be a portion of your monthly income)

• Untaxed gains = faster growth.
• Source of retirement income.
• Switch between investments within annuity tax-free.
• You choose how much to contribute during accumulation.

Time to get into specifics. Check out our   FIXED ANNUITY   page