Annuity Taxes
The following list provides links to some of the key terms discussed in this chapter on annuity taxes:
Glossary:
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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.
Annuity Fees and Expenses
Expenses should be a top priority for any financial services consumer. Many people have been conditioned to be aware of expenses when it comes to investment products. Indexed-bases investment management companies such as
Glossary:
Companies:
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Detailed Annuity Information
Annuities are complex financial products. The annuity buying process should include detailed considerations that range beyond topics such as whether to buy an annuity and what type of annuity might make the most sense.
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Annuity Prices
Annuity pricing can be confusing and a detailed discussion is beyond the scope of this buying guide.
Glossary:
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Annuity Payout Options
In addition to deciding between fixed or variable income streams, the annuity buyer needs to decide how long annuity income payments will last and who will receive those payouts. The options include the following:
Life
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Key Phrases:
Glossary:
