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Annuities
Annuities
An annuity is a financial product that allows a contract holder to accumulate money on a tax-deferred basis and receive a series of payments at regular intervals. People purchase annuities to obtain an income or to supplement retirement income they will receive from Social Security, pension benefits, investments and other sources. There are many different types of annuity contracts. Immediate annuity contracts provide income payments that normally begin within a year after the premium is paid. Deferred annuity contracts provide income payments that begin later, often after many years. Individual contracts cover only one person, while group contracts cover a specific group of people.
Fixed Annuities
With fixed annuities, premiums accumulate at rates of interest set by the company, and the amount of each annuity payment is determined when payments begin. A new type of fixed annuity contract is the indexed annuity. In indexed annuities, accumulation values are based not on the investment experience of the insurance company issuing them, but on the changes in value of a major stock index. Like traditional fixed annuities, the insurance company issuing them guarantees the principal less any withdrawals or surrenders, and the amount of each payment is determined when payments begin.
Indexed Annuities
An Indexed Annuity is usually a fixed annuity with alternate methods of determining and crediting interest. While traditional fixed annuities typically declare interest in advance for premium payments based on the performance of the company's underlying investments for those premiums, an IA's interest is determined, at least in part, by the performance of a specified index of marketplace performance over a stated period.
An annuity is a financial product that allows a contract holder to accumulate money on a tax-deferred basis and receive a series of payments at regular intervals. People purchase annuities to obtain an income or to supplement retirement income they will receive from Social Security, pension benefits, investments and other sources. There are many different types of annuity contracts. Immediate annuity contracts provide income payments that normally begin within a year after the premium is paid. Deferred annuity contracts provide income payments that begin later, often after many years. Individual contracts cover only one person, while group contracts cover a specific group of people.
Fixed Annuities
With fixed annuities, premiums accumulate at rates of interest set by the company, and the amount of each annuity payment is determined when payments begin. A new type of fixed annuity contract is the indexed annuity. In indexed annuities, accumulation values are based not on the investment experience of the insurance company issuing them, but on the changes in value of a major stock index. Like traditional fixed annuities, the insurance company issuing them guarantees the principal less any withdrawals or surrenders, and the amount of each payment is determined when payments begin.
Indexed Annuities
An Indexed Annuity is usually a fixed annuity with alternate methods of determining and crediting interest. While traditional fixed annuities typically declare interest in advance for premium payments based on the performance of the company's underlying investments for those premiums, an IA's interest is determined, at least in part, by the performance of a specified index of marketplace performance over a stated period.
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