Annuities and their purpose are often misunderstood and questioned. But used properly, an annuity can be a terrific option in one’s savings plans for future needs.
An annuity is an insurance product that is primarily a long-term savings program and is very often used in putting aside money for an event in the distant future. Tax-deferred retirement fund growth, saving for a child’s future education and gifting money to future generations are some of the more popular uses of an annuity.
Essentially an annuity is a savings program that is consummated between a life insurance company and the purchaser. The annuitant is the person whose life the annuity is based. The purchaser of the annuity and the annuitant can be different persons. Often a parent or a grandparent will purchase an annuity in the name of a child or a grandchild.
The promise of the insurance company is to pay interest on monetary deposits made by the purchaser. These interest payments are tax deferred, meaning no tax is paid on the interest until withdrawn. This is a substantial benefit because the purchaser/annuitant is able to take advantage of the power of compound interest over time. Annuities can be used for traditional IRA’s and the annuitant can receive all the tax advantages offered by opening a “Qualified” annuity.
The advantages of having an annuity can be a terrific asset to individuals and businesses. Purchased properly, they can be used as another tool in securing your world. Are they right for you? We’re happy to help you find out.
Making the benefits of good products understandable to all of us. That’s b.i.g!