ANNUITIES OVERVIEW
An annuity is a contract issued by an insurance company. It is a unique financial product
that provides tax deferral of interest and capital gains and the option (if funds are annuitized)
of a guaranteed monthly income for life. Although annuities can serve various needs, the
primary purpose of an annuity is that of a retirement vehicle for the annuitant, the person who
will usually receive the annuity benefits. The annuity is an attractive retirement vehicle because
the money accumulating in an annuity, grown on a tax deferred basis. There are two parts to an
annuity; the accumulation phase and the distribution phase.
After accumulating money in an annuity it is not mandatory that the annuitant exercise the annuitization
option and relinquish control of his or her cash value and enter into the annuity distribution phase, the
annuitant can simply cash out of his or her annuity.
Known by different names:
◘ Fixed Annuities
◘ Variable Annuities
◘ Equity Indexed Annuities
◘ Flexible Premium Annuity
◘ Freedom Annuity
◘ High Yield Annuity
◘ Money Market Annuity
◘ Single Premium Annuity
◘ Plus Others