WHAT TYPE OF ANNUITY MAY RIGHT FOR YOU?
To decide which, if any, annuity product is right for you, you need to determine first what your level of risk may be. If you know you have a low risk tolerance level, a fixed annuity may work for you. Your objective is conservative, and you want the most guarantees available. For someone with a moderate risk level, an equity indexed annuity will better suit your needs. With equity indexed annuities, you would like to peg account growth to market indexes. However, if you have a high risk tolerance, a variable annuity may be they way to go. Your investment objective is moderate to aggressive. You are willing to forgo some guarantees for higher potential account growth. In any scenario, it is best that you consult a qualified advisor to help you determine what type of annuity product may be right for you.
As mentioned before, there are a few significant advantages an annuity has over other retirement planning vehicles. With fixed annuities, there is the guarantee (This guarantee is reliant on the insurance company’s ability to pay) of your principal, with variable annuities the potential high yield of your principal. Unlike an IRA (Individual Retirement Account) you are allowed to make contributions to your annuity for life, with little or no cap to the amount of the contribution. Taxation on the principal is deferred until the agreement is annuitized, and the interest earned is also tax free. And with many annuity products, there are a number of pay-out options and beneficiary options that make it possible to bequeath without a tax penalty.
In planning for your financial future, it is usually best to have the guidance of a qualified advisor. There may be further tax or legal questions that need to be clarified before making your decision. Therefore, we suggest you consult a qualified professional to help determine which annuity product, if any, would be right for you.