Fixed Annuities

If you have money set aside in a fixed annuity or a CD with the sole purpose of passing it on to your loved ones, you may be missing a huge opportunity to increase your principal. Have you thought about how the money you leave will be paid at your death? Taxes can eat up a large portion and if not prepared for properly, your loved ones could get slowed down by a lengthy and expensive probate process. In general, life insurance passes on income tax-free and in many cases money from life insurance will pass on outside of probate.

Financial magazines, newspapers, TV programs, and local communities have battered the reputation of a very strong and useful financial product, the annuity. In many cases, the most outspoken opponents of annuities are those who are not licensed to offer them or don’t really understand them.

What is an Annuity? The word annuity has its origins in a Latin term that means “annual.” Today, an annuity is an investment product sold by insurance companies. Annuities can be purchased through a series of contributions or in one lump sum. The money put into the annuity contract is allowed to grow for a period of time.

Annuities come in a combination of types and varieties and some are extremely complex; unfortunately, the more complex they are the more opportunity for abuse there is. So, a simple breakdown on the Two Types and Three Varieties of annuity contracts is as follows:

Type 1. Immediate Annuity