Annuity is offered by insurance companies and it is an insurance product that pays you. There are two types of annuities: Fixed and Variable annuities. Fixed pays fixed, determined amount for a certain period of time or for life depending on the term selected. Variable annuities payments will very depending on performance of annuity’s underlying investments. The amount of payout will also depend on duration of annuity, which could be for certain amount of years or for life. Think of annuity as a very long term bank’s CD or a very long term saving account. Your money is locked for a long duration of time, which you can not take out without a penalties but it typically pays much greater return than most savings accounts or certificates of deposit. Annuities could be a good retirement plan for many individuals. One of the examples how annuity can be used is when grand parents want to put money into annuity that is payable to their teenage grand children. Why? Several reasons, one I can think of is when young adults get large amount of money they often may end up spending it very quickly on nice cars and other things but parents or grand parents want them to receive the money slowly, so they don’t go and spend it all too quickly on expensive gadgets. Other people put money into annuity that pays good income every single month and it pays more than banks would pay if they left the money in the bank.
If you think annuity might be the right product for you or you unsure, speak with Slavsky Insurance agents.