What Are Annuities And How Do They Work

Here is how they work.

What are annuities and how do they work. Annuities are a contract between you and an insurance company in which you make a lump-sum payment or series of payments and in return receive regular disbursements. In return you receive a lump sum or regular disbursements once the annuitization phase has been reached. An annuity is a contract that provides someone a stream of income typically in retirement in exchange for money paid into the annuity.

In this short animated video see how annuities work what they are and how annuities can help provide retirement incomeFind out more by visiting httpsw. Sold by financial services companies annuities can help reinforce your plan for retirement. The insurance company promises you a minimum rate of interest and a fixed amount of periodic payments.

An annuity provides income in retirement either as a stable income stream or as a place to earn interest on your money. An annuity is an insurance product that allows you to swap your pension savings for a guaranteed regular income that will last for the rest of your life. People take out annuities for one of two major reasons.

Fixed annuities are regulated by state insurance commissioners. Receiving a guaranteed income stream for life is something that should pique the interest of any investor. Annuities are a form of retirement income product meaning that they provide you with a stream of income in your retirement years similar to superannuation or an account-based pension.

Annuities are most often offered by insurance companies. Annuities could be designed to pay out for ten years or the rest of your life. Often marketed as a financial product an annuity is basically a contract between you and an insurance company designed to provide an income that is guaranteed for the rest of your life.

They traditionally paid an annual sum every year as agreed upon in the contract. Annuities are an insurance contract. The general theme is that you give your money to an institution usually an insurance company or a charity and that institution promises you a certain rate of return typically for as long as you live.