Annuity Basics

An annuity, by definition, is an agreement with an organization so that you can receive set payments of money over time. An annuity typically allows you to receive payments for the rest of your life. Additionally, you can decide whether you want to receive payments monthly, or as annual sums.

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Annuity Basics

The risks associated with an annuity will vary based on the type of annuity it is. For example, some annuity products don’t lose money if the stock market drops, while others have this risk. A fixed indexed annuity (FIA) is protected in the event of a stock market decline. Because safety is one of our core values, these are the types of products we often recommend. Although, everyone’s situation is different. Is an FIA the right option for you? You can reach out to us to find out.

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Fixed Indexed Annuity Basics

An FIA comes with the benefits of keeping your money safe, while also providing reasonable rates of return.**

First, you contribute a set amount of money. Then, the issuing insurance company agrees to protect it and pay you interest based on an index, which is in the terms of the annuity contract. There is also a fixed term and a pre-defined schedule with payments.

Annuity Basics and Taxes

An annuity grows tax-deferred. You only pay taxes on the money in your annuity when you actually take it out. Additional tax benefits could also be possible.

For example, for people under age 59 1/2, who get a lump sum from a former employer’s 401(k). If that lump sum is part of an early retirement or severance, you’d have to pay hefty taxes on it. However, if you “rollover” that money into an annuity, you may be able to postpone these taxes. Of course, you should always consult a qualified tax advisor about things like this.


How could an annuity help you?

Do you want to learn more about annuity basics? You can reach out to us to get educated. Attend one of our complimentary dinner seminars, or schedule a one-on-one meeting with us to discuss your personal needs and goals. Help us help you!

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