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The Two Types of Annuities Simplified

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There are several investment strategies for ensuring that retirement is a time that is as free from stress and as financially stable as possible. One of the most popularly used of these strategies is investing in an annuity, which can guarantee a certain level of income for a designated period of time. There are a variety of different Types of Annuities, each with their own benefits and drawbacks. Choosing the right annuity can be a large investment of time and effort.
However, researching and ultimately choosing the best annuity for each individual’s unique financial situation can prove to be incredibly cost effective and lucrative.

Any annuity is a way in which an investor can plan for their retirement years, transforming part of their pension pot into a long term financial solution to be used during their retirement. However, choosing the right annuity can make all the difference when trying to plan for years spent in retirement.

Lifetime Annuities
A lifetime annuity is a way for those planning for retirement to use part of their pension pot to guarantee a certain level of income for the rest of their life. With this type of annuity, the investor is guaranteed a determined level of income for the remainder of their life, however long that may be. However, there is obviously no way to predict the lifetime of the investor. So there is no real way to know how long the payments will last. With this type of annuity, the payments stay constant, which means that they may actually end up losing value, depending upon inflation. There is no real way to increase income or payout with this form of an annuity. However, one positive aspect of this type of annuity is that the investor can always plan to have that designated amount of money, as it is guaranteed for the lifetime of the investor.

Variable Annuities
Variable annuities can sometimes be accompanied by great risk. However, they can also produce great reward. With this type of annuity, there is a much greater opportunity for asset growth, given that there are a range of investment choices available. The value of the investment differs depending on the investment options that are chosen. The investment options typically include mutual funds that invest in bonds, money market instruments, stock, or a combination of the three.

Those who choose this annuity strategy are those who are really looking to grow their asset and investment. However, for those who invest in variable annuities, it is crucial to keep in mind that that asset can be compromised. There is both opportunity for growth as well as opportunity for loss.

The Meaningful Definition of Annuities

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Annuities have become increasingly more popular as of late and there are several reasons as to why consumers are finding it more beneficial to invest in this particular investment strategy, especially when considering retirement years. Retirement is meant to be a time marked by stability and security. Annuities have shown to be able to provide consumers with these qualities.

An annuity gives the consumer a guaranteed income for life after retirement. The consumer can use a lump sum from their pension or from their savings to purchase an annuity, allowing them to secure a stable income and stable financial life after they’ve stopped working. There are several options for annuity purchases and there are several insurers to consider when shopping around for an annuity. The definition of annuities includes the idea that is meant to allow for a stable and secure financial future during retirement. Given that level of importance, it is crucial for consumers to consider all options and all potential avenues when choosing the right annuity.

Annuities have become popular for a few different reasons, the first of which is that the government has made their purchase compulsory. The second reason for their surge in popularity is the idea that annuities allow for a stable income throughout retirement. While they do not pose a chance at gaining a large return on investment like strategies that work on the fluctuation of the markets, such as stocks, they do allow for a guaranteed income. This guarantee is rarely found in investment portfolios. They pose a pretty low risk to financial security and consumers seem to gravitate toward that low risk when it comes to their retirement years.

Annuities have also become popular because they come with a variety of different options. For many the idea of a reliable source of income throughout retirement is too hard to pass up and consumers are using annuities as a solid source of income in their retirement portfolios. Consumers can choose from fixed, variable, and immediate annuities. This means that through research, the investor is likely to find an annuity that will work for their future goals. Through research, investors are also able to choose an investor that proves to have the plans they will work best for them. Because of the open market in the current financial industry, consumers are able to find both the annuity and the investor that will serve to fit their needs best.

What value would an Annuity bring to you?

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We are living for longer today than ever before. At the same time, the cost of living is ever rising. Changing social and economic factors mean that planning your finances during retirement has become more important than ever before. After all, retirement is known as the golden period, when one should be able to enjoy the fruits of life’s labour. It is therefore vital to plan carefully and optimise your financial assets to provide for you when you stop working. Things like annuity value prove to be immensely significant during retirement, as an annuity is one of the most important, and often the only source of income for pensioners.

An annuity provides a regular and steady income in exchange for a lump sum. People usually invest their pension savings into an annuity scheme, which then pays out an income either for as long as you live, or for a pre-agreed period of time. How much income an annuity can offer you, or Annuity Value, depends on the size of your annuity fund, which is the amount invested in the annuity, as well as various other factors.

The most important factors that determines annuity value is the type of annuity you choose to invest in and the current annuity rates. Other factors include age, gender, and location. Depending on your health and lifestyle, you could also be eligible for an enhanced annuity, which has a higher annuity value based on the shorter than average life expectancy of the applicant.

Often an annuity is the only source of income during retirement, and so choosing the right annuity with sufficient annuity value is extremely important. Once you buy an annuity it cannot be changed or cancelled – so it is important to make the correct decision the first time around. An annuity offers a chance to make the most of your life savings, but choosing an annuity that underperforms or does not suit your needs could mean losing your life savings to an ineffective investment.

It is imperative to shop around and use the open market option to find the most suitable annuity with a sufficient annuity value. You can consult an independent financial advisor with expertise in the retirement sector to understand the implications of investing in different types of annuities and choosing the best option. You can also use online tools like annuity calculators etc. to find out the best annuity value you could get in exchange for your annuity fund.

Impaired Annuities Explained

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Annuities have become increasingly popular and reliable in ensuring the financial security of individuals as they age and move in to their older phases of life. There are different annuities available and choosing the right annuity with the right provider can help to ensure a stable financial life during the years of retirement. With an economy that is often tumultuous and unpredictable, many individuals are seeking ways in which to ensure that their retirement years will be as free from financial worry as possible. For some, an impaired annuity offers the most lucrative and stable means to do so.

Eligibility Factors

Annuities are offered by insurance companies and are financial products used to help secure financial stability in the years ahead. They can be purchased in a couple of different ways, either through a payment system or in one larger lump sum. At a later date, the annuity is dispersed through monthly payments to the annuitant directly.

There are several advantages to annuities, perhaps the biggest of which is that the money in the account is eligible for tax-deferment until the funds are withdrawn.  This can be hugely impactful during retirement years in that most individuals make less money during retirement than during their working years, meaning that the tax break can be increasingly more beneficial after retirement.

Annuities are paid out on a monthly basis, most often until the death of the annuity’s owner.  To ensure the appropriate timing of the annuity payments, an insurance actuary will estimate the life span of the annuity’s owner to determine the most appropriate payout each month.  There are several different factors that are considered when the lifespan is predicted. One of these is the health condition of the annuity owner.

An impaired annuity becomes an option for those individuals who have a physical condition or health concern that can be expected to decrease their life expectancy.  For those with a qualifying condition, more money from the annuity can be received on a monthly basis, since the term of the annuity is expected to be shortened. The qualifying conditions for an impaired annuity can vary but there are several that are very commonly seen by insurers. These include diabetes, heart disease and high blood pressure.

In the United Kingdom, annuity accounts are typically converted from retirement pensions. In order to qualify for an impaired annuity in the UK the expectation is that the annuity owner will not live for more than four or five years. The conditions most often accepted under an impaired annuity in the UK include cancer, stroke, heart disease and major organ failure. In the UK, impaired annuities can also sometimes be offered to residents in nursing homes. They may even be purchased rather quickly to ensure payment is prompt.

Advantages of Impaired Annuities

To qualify for an impaired annuity, the individual must have their medical history reviewed and confirmed. However, the advantages to qualifying for an impaired annuity can be tremendous. For those individuals that qualify, there is no way to verify that the years lived will be shorter than those individuals who do not qualify for the impaired annuity. That means that for those who qualify for the impaired annuity, the financial advantage can be quite beneficial if they live past the amount of years predicted given their health condition(s).

Most insurance estimates predict that an individual can receive approximately 30% more money with an impaired annuity than they would with a standard annuity.

Annuities present a way to safeguard financial security during retirement years. However, for those individuals who qualify for an impaired annuity, the increased income during what may be the last years of life can prove to be even more beneficial.

For those who qualify, the benefits of an impaired annuity far outlast those of a standard annuity.

Read the Latest Tips and Tricks with an Annuity Guide

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As consumers approach their retirement years, they can spend a great deal of time and energy on determining exactly how they will fund their lifestyle after they have ceased working. For many, this means investing in some kind of annuity with the savings they have deposited in their pension pot. However, this is not the only option available to consumers and even if it were, there are several different types of annuities, all of which offer different options to consumers. With consumers having very different and unique situations, it is important that the consumer chooses wisely when purchasing any kind of investment, including an annuity. Consulting with an annuity guide can be a solid and reliable way for consumers to get the information they need in order to make an educated guess on the financial well-being of their retirement years.

An annuity guide can offer an objective opinion to most consumers. Each consumer has a unique lifestyle and certainly has unique needs.  While asking family and friends for opinions and advice can be worthwhile, consulting an annuity guide can be far more objective and can lay out most of the facts related to purchasing an annuity. It can often be a more reliable resource when trying to decide how to invest in retirement.

An annuity guide has other benefits as well. For one, it can be the most updated version of information available on the current market. That means that it allows consumers to stay current on everything affecting annuities at any given time. This means that consumers are able to make decisions based on accurate and up-to-date information. Using more than one annuity guide can also be helpful to consumers and can provide them with all of the information they may need when choosing the right annuity for their particular situation. With so many annuities available and on the market, it is crucial for consumers to get all of the information they can in order to make their most educated guess on choosing the right annuity for their particular situation.

There are several factors that go in to determining which annuity is the right choice to help fund retirement, or if an annuity is the right choice at all. An annuity guide can help consumers to make the most educated guess for their unique situation. Consulting more than one annuity guide can give consumers more than one objective view on annuities.