Diversify your retirement strategy with an annuity from Allsurance.
An annuity is an insurance product that provides a stream of payments to an individual, typically over a period of time. Annuities can be used for a variety of purposes, including retirement income, estate planning, and tax-deferred saving. An annuity typically has two components: an accumulation phase and a payout phase. During the accumulation phase, the annuity owner makes contributions to the annuity. These contributions grow tax-deferred, meaning that the owner does not have to pay taxes on the growth until the money is withdrawn.
During the payout phase, the annuity owner begins to receive payments from the annuity. The payments can be made for a specific period of time, such as ten years. Or, the annuity owner can choose to receive payments for the remainder of his or her life.
There are many types of annuities available today, including fixed rate annuities and variable rate annuities. With a fixed rate annuity, the amount of each payment is known in advance. This type of annuity can provide a predictable stream of income in retirement.
With a variable rate annuity, the payments can vary depending on the performance of the underlying investments. Variable annuities are often more aggressive than fixed annuities and can provide the potential for higher returns. However, they also come with more risk.
Some annuities have the potential to earn interest based on the growth of an external index (we call this “indexed interest”). You can choose one or more external indexes every crediting period (or “allocation options”), depending on your financial goals. Other types of annuities offer growth potential through variable investment options.
You don’t have to pay income taxes on the earnings in your contract until you take money out of your annuity. Tax deferral may help the money in your annuity compound over time, for even greater accumulation potential.
Annuities can help protect the money you place in your contract (the “principal”). Some annuities protect all of your principal from market downturns, while others offer greater potential in exchange for some market risk, including the risk of losing principal.
After a period of time specified by your contract, annuities provide guaranteed retirement income. Some annuities let you choose from a variety of income options – and some even offer the opportunity for income increases in retirement. These options may either be built in to the contract or optional and available for an additional cost.
