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What is an annuity? |
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An annuity is a long-term (often 5 years or more), interest-paying contract offered through an insurance company. An annuity can be "deferred" as a means of accumulating income while deferring taxes, or it can be "immediate" and pay you an income now and as long as you live |
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The Opposite of Life Insurance |
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Annuities are sometimes described as the opposite of life insurance. Annuities protect you from living too long, while life insurance protects you from dying too soon. With an annuity, the financial risk of "living too long" is transferred to the insurance company. |
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A Lifetime Income |
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With the average retirement period lengthening, annuities are increasing in importance. Only annuities can pay you an income you can't outlive, even after all the money you put into the annuity has been exhausted. Therefore, annuities can help you manage your cash flow, and provide a safe and competitive means to accumulate funds. |
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