Annuities

In its most general sense, an annuity is an agreement for one person or organization to pay another a stream or series of payments. Usually, the term “annuity” relates to a contract between you and a life insurance company, but a charity or a trust can take the place of the insurance company.

There are many categories of annuities. They can be classified by:

• Nature of the underlying investment – fixed or variable
• Primary purpose – accumulation or pay-out (deferred or immediate)
• Nature of pay-out commitment – fixed period, fixed amount, or lifetime
• Tax status – qualified or nonqualified
• Premium payment arrangement – single premium or flexible premium

Annuities can be complex, confusing, and very costly when used incorrectly. But when used properly, annuities may provide guaranteed benefits that can help you secure your dream retirement lifestyle and be an important part of your longevity planning.