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Annuities: A Beginners Guide

By: Don Beavers


As individuals become older their retirement options can become much more limited. Single premium annuities allow individuals that either receive some type of windfall large sum of money, or perhaps those that got a late start in retirement planning to participate in utilizing the power of annuities for their retirement plans.

The single premium annuities term refers to the pay-in method of funding an annuity. With a single premium annuity, a specific amount is paid just once without any further contributions. The investor then receives periodic returns on the amount funded into the annuity.

The single premium concept is nothing really new. Individuals have long had access to other single premium insurance products - as an example, it is possible to buy single premium universal life, single premium whole life and single premium variable universal life. The whole idea behind the single payment concept is be able to purchase an insurance product with a fully guaranteed contract that will never require additional funding in the future. Of course there are always going to be exceptions and variations to different single premium plans that may not fully guarantee future results so please always do your research and consult with someone knowledgeable before investing.

A couple of payout options are available for single premium annuities:

Single premium immediate annuity: A one-time lump sum is invested for the purpose of creating an immediate income stream. The payments can be set up by the investor to be received monthly or perhaps even less frequently. An income stream for the investor will begin at a pre-agreed time. Any time length can be agreed upon for the payout varying from a specific number of years to a continuing lifetime guaranteed payment.

Single premium deferred annuity: Again, this is created as a one-time lump-sum investment. The single premium annuity can be one of several different types including a fixed annuity, an indexed annuity and a variable annuity. This type of annuity would normally be made to create a farther in the future strategic income stream for retirement.

So, after a one time investment and the agreed upon period of time, the payouts begin providing an ongoing source of income for the investor.

Annutities can be used for retirement funding, to provide care for dependents, and also for gifts. Annutites can be used to provide a source of income to dependents after your death. Annuities can be used to provide specified child support or even alimony payments. Annuities can be used to fund specialized education and care for a disabled child. Annuities can be used to consolidate assets and turn them into a stream of income.

With the Single Premium Annuity, you have a wide variety of income plan options. You can receive income for a specified number of years, the rest of your life, or for the joint life of yourself and a beneficiary.

For more ideas and information about annuities and other financial products check out the insurance blog at recentaddition.com . There are many types of annuities that an investor should become familiar with before buying an annuity. The most important thing to remember is to do as much research on your own as possible, get an idea of what you believe will work best for you, then allways consult a licensed professional before making any investment.

Article Source: The Article Library

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