An Annuity is a financial product and has two main types, fixed or variable, both of which can be deferred or immediate. Annuities provide tax-deferred growth throughout its accumulation phase of a deferred annuity.
A deferred annuity also has an annuitization or payout phase. During the payout phase the insurance company agrees to pay an income stream over a specified time period, for a specified amount or for life. The primary purposes of tax deferred annuity published rates are to defer income taxes until a future date and to provide an income stream. Annuities, like life insurance, can consist of an owner who is different than the annuitant the insured in a life insurance contract.
Also, like life insurance, should the owner pass away prior to the payout phase, the cash value avoids probate and passes directly to any beneficiary indicated. Any death benefit the beneficiary receives will be taxed as ordinary income to the beneficiary. Annuities are long term financial products and generally designed for persons who don't need access to the money for several years or at least until age 59.
In other words, it works the same way as a nondeductible IRA. Because you're not paying taxes along the way, you have the chance to earn gains on untaxed money, and it grows much more quickly than a taxable account does (depending, of course, on the investments you've chosen). But the guaranteed payments promised in wachovia fixed annuity retirement income contract come at a price: providers charge a variety of fees for the management and insurance of the annuity. An annuity has two phases: the accumulation phase and the distribution phase. During the accumulation phase, you can contribute as much as you want and the earnings in the annuity grow tax-deferred. During the distribution phase, you can elect to receive a lump sum or you can annuitize.
Distributions and withdrawals are generally taxed as income. An annuity consists of an insurance wrapper and a subaccount.
The insurance wrapper is the more complicated part of the annuity. There are two broad types of annuities: fixed and variable. The best rated fixed annuities is more conservative choice, provides a set return backed by an insurance company, much as a bank provides a stated rate of return on a certificate of deposit. Although the rate of return varies somewhat depending on prevailing interest rates, the return is still more stable than variable annuity complaints marketing. A variable annuity invests in stocks, bonds, or money market funds, depending upon the type of subaccount you choose. Usually, you select the subaccount based on the level of risk and return you want in your annuity, just as you would when purchasing a mutual fund.
As you would expect, the more conservative find annuity rates subaccounts invest in money markets and bonds, and the more aggressive invest in stocks. The amount of return depends on the actual return of the subaccount investment. If the payout phase of subcharter is for life, it pays the owner during his or her entire lifetime. The payments cease when he or she dies. If an annuity's payout is "certain," it pays the owner for a specified period, and if the owner dies before the period ends, then a beneficiary receives the payments until the certain term ends. In other words, if the annuity owner has a certain term of 10 years for an annuity but receives only 5 years of payments before dying, then the owner's beneficiary will receive payments for another 5 years, and then the payments would cease.
A deferred annuity also has an annuitization or payout phase. During the payout phase the insurance company agrees to pay an income stream over a specified time period, for a specified amount or for life. The primary purposes of tax deferred annuity published rates are to defer income taxes until a future date and to provide an income stream. Annuities, like life insurance, can consist of an owner who is different than the annuitant the insured in a life insurance contract.
Also, like life insurance, should the owner pass away prior to the payout phase, the cash value avoids probate and passes directly to any beneficiary indicated. Any death benefit the beneficiary receives will be taxed as ordinary income to the beneficiary. Annuities are long term financial products and generally designed for persons who don't need access to the money for several years or at least until age 59.
In other words, it works the same way as a nondeductible IRA. Because you're not paying taxes along the way, you have the chance to earn gains on untaxed money, and it grows much more quickly than a taxable account does (depending, of course, on the investments you've chosen). But the guaranteed payments promised in wachovia fixed annuity retirement income contract come at a price: providers charge a variety of fees for the management and insurance of the annuity. An annuity has two phases: the accumulation phase and the distribution phase. During the accumulation phase, you can contribute as much as you want and the earnings in the annuity grow tax-deferred. During the distribution phase, you can elect to receive a lump sum or you can annuitize.
Distributions and withdrawals are generally taxed as income. An annuity consists of an insurance wrapper and a subaccount.
The insurance wrapper is the more complicated part of the annuity. There are two broad types of annuities: fixed and variable. The best rated fixed annuities is more conservative choice, provides a set return backed by an insurance company, much as a bank provides a stated rate of return on a certificate of deposit. Although the rate of return varies somewhat depending on prevailing interest rates, the return is still more stable than variable annuity complaints marketing. A variable annuity invests in stocks, bonds, or money market funds, depending upon the type of subaccount you choose. Usually, you select the subaccount based on the level of risk and return you want in your annuity, just as you would when purchasing a mutual fund.
As you would expect, the more conservative find annuity rates subaccounts invest in money markets and bonds, and the more aggressive invest in stocks. The amount of return depends on the actual return of the subaccount investment. If the payout phase of subcharter is for life, it pays the owner during his or her entire lifetime. The payments cease when he or she dies. If an annuity's payout is "certain," it pays the owner for a specified period, and if the owner dies before the period ends, then a beneficiary receives the payments until the certain term ends. In other words, if the annuity owner has a certain term of 10 years for an annuity but receives only 5 years of payments before dying, then the owner's beneficiary will receive payments for another 5 years, and then the payments would cease.
