Annuities Explained In Brief

Many intelligent people require annuities explained to them, and still it can be a really difficult concept to grasp. Here, we are not trying to sell you an annuity, merely try and enlighten you as to what are secondary annuity and expand your knowledge so you will be able to ask relevant questions, look out for the pitfalls and not be bamboozled by someone trying to sell you one.

At the basis of an annuity is that you invest money for a particular period of time. When that time has expired, you begin to receive a certain return for a period of time (usually a lifetime). This is a good way to supplement or replace your retirement pension which is often insufficient. Why a pension annuity is often preferred by many, is because a steady return is guaranteed and therefore carries less risk than more traditional investments such as bonds and stocks are more risk prone.

Although others exist, there are basically two primary types of annuity; immediate or deferred. An immediate annuity is one where you invest a significant lump sum and receive monthly payments. In a deferred annuity, you invest monthly and receive monthly payments from a specified date or when the fund reaches a certain amount. If you go for the deferred option, the earlier you start the smaller your payments will be as there is longer for your investment to grow. When your investment is complete, you will receive regular payments.

One thing to consider here is whether you would like to nominate your spouse to receive your payments should you die first, so make sure you check on this as it may fall outside of inheritance taxes depending on which country you reside in.

Here at Annuities Explained we believe the difficult part to come to terms with is the fact that you could lose out with an annuity. This is because if you die before using up the value of your annuity you lose out. However, on the positive side, if you live longer, you are in pocket and the company may lose out over the fees they have already received for setting up the policy! Therefore, it stands to reason when these companies make their calculations; they make an assumption about how long they think you will survive.

OK, so now we are getting tricky – your payment for an annuity. This may be a fixed rate where you know exactly what you will get and give you a guaranteed return over time, or a variable rate. With a variable rate, you don’t necessarily know exactly what your return will be. The guaranteed return is at a lower rate, but as the funds are tied in to other more variable funds, your final return may, or may not be a lot higher.

We hope that annuities explained in this simplistic way will be of help, but they are by no means exhaustive and we are not financial advisers. You are therefore encouraged to seek the appropriate advice from an adviser whom you trust, or who comes well recommended life quote 4 you.

Annuities News:

Lead poisoning victim: Selling future for cash now - Minneapolis Star Tribune

Lead poisoning victim: Selling future for cash now
Minneapolis Star Tribune
Widely embraced by insurance companies and the legal community, structured settlements guarantee future income for people who are sick or hurt. With payments spread out, recipients are less likely to spend the money all at once and fall back on public .

and more

Imperial Holdings loses $13M in Q3 amid federal investigation -

Imperial Holdings loses $13M in Q3 amid federal investigation
Imperial Holdings also has a structured legal settlement division. The company's $12.6 million third quarter loss was deeper than its $6.8 million loss in the same quarter a year ago. Imperial Holdings said it derived less income from its life .
Imperial Holdings, Inc. Announces Third Quarter 2011 ResultsMarketWatch (press release)
Imperial Holdings, Inc. Schedules Third Quarter 2011 Results Conference CallBusiness Wire (press release)

all 21 news articles

Some structured settlements may offer significant advantages
Structured settlements don't seem to be a good deal for investors, but their non-securitized counterparts might be..

The SUPP New Plan
A SWOT analysis of the Party has been carried out before the preparation of this plan. The analysis on the strength, weakness, opportunities and threats formed the basis in the formulation of this new plan for the Party...

In the Matter of Lehman Brothers - Part 2: Well Structured Messes - EconoMonitor (blog)

In the Matter of Lehman Brothers - Part 2: Well Structured Messes
EconoMonitor (blog)
The settlement may have been motivated by Lehman's desire to enable the bankrupt firm to continue to use the uncertainty as leverage in it settlement negotiations. Losses for investors in structured products will sharply increase if the flip clause is .

and more

Potential Pension Income Abuse Targeted by Sen. Harkin - AdvisorOne


Potential Pension Income Abuse Targeted by Sen. Harkin
It's a question that dogs lottery winners and parties to structured settlements, and it might now involve your client's retirement plan. Leslie Scism of The Wall Street Journal has been tracking the efforts of Sen. Tom Harkin, D-Iowa, chairman of the .

and more

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