Oncken Insurance Agency, P.C. Blog
Annuities are popular in the US, especially during the Great Depression, when the concern about the volatility of the stock market began to endanger people’s retirement. Now that pensions plans are not as common, plenty of retirees prefer annuities to replace streams of income.
What is an Annuity?
Annuities are contracts between an insurance company and you. It covers particular goals, including lifetime income, principal protection, long-term care expenses, and legacy planning. Annuities are not investments, even though they may be marketed as one. They lock you along with the insurance company into various obligations. If there comes a possibility of breaking them, it usually comes at a very steep cost.
The Types of Annuities
How do Annuities Work?
Annuities work by transferring risk from the annuitant (the owner) to the insurance company. Similar to other insurance types, you purchase an insurance policy to bear the risk. Premiums can either be a series of payments or a single lump sum, depending on the annuity type. The accumulation phase is the paying period of the bonus.
However, unlike most insurance types, annuities do not require you to pay indefinitely. Eventually, there comes a time where you stop lending cash, and the annuity begins paying you instead. The moment this happens, you have entered the payout phase of your contract.
Variable Annuities Have Investment Risks
Some annuities do not ensure a fixed rate of return. If you decide on a variable annuity, you have invested premiums in various sub-accounts similar to that of mutual funds. Every subaccount has an objective for investment and along with management fee charges to add to the fees of the insurance company.
Purchase an annuity now and have a guaranteed income for your entire life! And because you have an ensured salary, you may have an opportunity to take an investing strategy that is more aggressive with your other assets.
At Oncken Insurance Agency, we do our best in making sure that our clients are well-protected with affordable and comprehensive policies. We make sure to go the extra mile to help you with your needs. To learn more about how we can help you, please contact our agency at (281) 256-8310 or Click Here to request a free quote.