WHAT IS AMNUITIES ?
Annuities are financial products offered by insurance companies designed to provide a steady income stream for individuals during retirement. They are typically purchased with a lump sum payment or through periodic contributions.
There are several types of annuities:
Immediate Annuities: Begin payouts shortly after the lump sum is paid.
Deferred Annuities: Accumulate funds over time before converting them into a stream of income.
Annuities can be fixed, where payouts are predetermined, or variable, where payouts fluctuate based on investment performance. They may also offer optional features such as death benefits or inflation protection.
BENEFITS OF AMNUITIES
Annuities offer several benefits, primarily focused on providing a reliable income stream during retirement:
Guaranteed Income: Annuities can provide a steady stream of income for life or a specified period, offering predictability and security against outliving savings.
Tax Advantages: Growth within annuities is tax-deferred, meaning earnings are not taxed until withdrawn, potentially allowing for more significant accumulation over time.
Customizable Options: They offer various payout options, including lifetime income, joint-life income for spouses, and inflation-adjusted payments, catering to different retirement needs.
Asset Protection: In many cases, annuities provide creditor protection, safeguarding assets from legal claims or bankruptcy proceedings.
Death Benefits: Some annuities offer death benefits, ensuring beneficiaries receive remaining funds if the annuitant passes away before exhausting the contract.
Diversification: Annuities can diversify retirement income sources, reducing reliance on other investments and potentially enhancing overall financial stability.
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