Annuity
An annuity comes in many forms, but a simple definition is that an annuity is a contract that converts a sum of money into a series of periodic payments for an agreed upon period of time. An annuity can be thought of as a financial vehicle that converts a pool of money into a stream of income. Annuities are most useful in addressing the financial planning needs of people in or approaching retirement. Annuities are unique in the financial world because they can provide protection against the risk or outliving one’s assets (longevity risk) by guaranteeing income payments in perpetuity or any other selected amount of time. Annuities can be viewed as a type of personal pension plan. Social Security is similar to an annuity in that money contributed over the course of one’s working years is converted into a series of periodic payments that provide income during retirement.
Design Your Own Pension with a New Generation of Variable Annuities
Article Discusses the Tax Implications of Purchasing an Immediate Fixed Annuity with an IRA
Am I better off just buying a CD for $100,000 than an annuity? Is FDIC insurance important? Aren't there less fees too?
It really depends on what your overall financial needs are. It is true that a certificate of deposit or CD is insured and less costly than an annuity, but an annuity and a CD serve very different financial purposes. With a CD,
Who insures my annuity? What happens if they fail?
"What happens to my annuity if my insurance company fails" is a natural and very common question in light of the financial crisis.
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