Annuities

So what are annuities? Do you want to know How Annuities work ?  These Resource Pages give information on the wide range of annuity products.

Here’s the Straight Talk: An Annuity is a contract between you and an insurance company.  You pay premiums to the company, and the company in turn grows your money Tax- Deferred , and commits to pay you either a lump sum, or a stream of income.

There are four key interest annuity rates components in an annuity contract. This should help investors understand where to direct the most attention.

Base Guaranteed Rate : This is the contractual minimum rate that the annuity will yield. This rate will range from 1-3.5% except in the case of a CD-Type Annuity, which will lock a higher rate for the life of the contract.

Current Rate : Each year an insurance company will declare a rate to be applied to in-force contracts. This keeps competition alive in the insurance industry.

Bonus Rate : Many contracts inject a bonus rate as an additional teaser. Certain annuities offer excessively high bonuses. Several factors need to be considered in regards to bonus rates.

Yield to Surrender This represents the effective rate of return projected throughout the contract time period. It is also the single most important interest rate to consider.

There are two main categories of Annuity, each with two main choices.

In terms of timing, there are either Immediate Annuities , or Deferred Annuities . These two choices refer to the timing of the payments from the insurance company to you.

In terms of the rate of appreciation on the capital you give the insurance company, there are either Fixed Annuities , or Variable Annuities .

Sounds simple, right?  Well there are millions of ways to complicate even the most straightforward concept, and annuities are no exception.   We’ll cut to the chase and help you understand the ground rules.  If you determine that an annuity might make sense for you, be sure to become a Member for our essential tools to choosing an annuity.

If you own an Annuity, there is a thriving trade in selling these guaranteed income stream payments.  Just search for structured settlement annuity buyers if you’re looking to sell an annuity contract.  But please explore this site for more information on annuities and critical decision tools to pick only the best companies and products.

We also have sections on annuity riders and living and death benefits - this is where products can get complicated, and expensive.  Be sure to look at the premium pages of this site once you are a Member too- our tools can really help you to cut to the chase and figure out what is important and what is not.