Question By: The term "annuity" refers to an insurance contract issued and distributed by financial institutions with the intention of paying out invested funds in a fixed income stream in the future. Investors invest in or purchase annuities with monthly premiums or lump-sum payments. The holding institution issues a stream of payments in the future for a specified period of time or for the remainder of the annuitant's life. Annuities are mainly used for retirement purposes and help individuals address the risk of outliving their savings. Annuities are designed to provide a steady cash flow for people during their retirement years and to alleviate the fears of outliving their assets. Since these assets may not be enough to sustain their standard of living, some investors may turn to an insurance company or other financial institution to purchase an annuity contract.
Types of Annuities Based on Payouts
Immediate annuity (income annuity)
With an immediate annuity, also known as an income annuity, you begin receiving payments within a year after purchasing it. An immediate annuity is typically funded by a retirement account, such as a 401(k), and is a good option for those ready to leave the workforce but still want to maintain a steady income.
Deferred annuity
With a deferred annuity, you receive payments that start in the future. Typically, this happens when you retire. In the meantime, your investment grows on a tax-deferred basis.
Visit https://orlowskywilson.com/what-kinds-of-annuities-are-good-for-safe-retirement-planning/ To schedule a consultation.
Answer By: