Retirees can choose a 5, 10, 15, 20, 25 or 30 year retirement plan. The option most people will most likely choose is the 20 year annuity. Millions of people plan for their retirement each day. Individuals look for ways to save money and yet plan for their old age.
For centuries individuals have invested in various plans. For example, the
was popular among all plans. Later, other plans begin to emerge such as insurance annuities, stocks, bonds, and real estate investments.
However, with all of these options available there are other solutions that retirees look at as being the most beneficial. First of all you must understand what an annuity is. It is a personal insurance plan that offers a regular source of income, plus it has a tax deferred benefit.
This feature alone attract millions of investors who are looking for ways to build up their retirement account. Individuals who enter into this type of agreement will need to pay their premiums for as long as the contract remains in effect or until the insurance matures. The plan offers a fixed rate and a fixed amount of income for a determined amount of time.
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Currently there are two common types of annuities, variable and
Each one comes with advantages and disadvantages. The biggest risk investors will need to worry about is the credibility of the insurance company who holds their investment. If the company goes under, the investment will be lost, unless the insurance company has made other arrangements or has filed bankruptcy. The company may not be liable to replace personal losses.
The premiums fees can be paid over time (annually) or in one lump sum payment. This is easier for people who want to purchase the insurance and wait for it to mature. This method makes budgeting easier as well.
If the single payment option is chosen the certificate is paid up in full and the 20 year option is in full effect. The benefit that many investors like is the fact that the insurer is entitled to receive one thousand dollars in 20 years and the policy will remain active. The full amount of the certificate is payable upon the death of the insurer.
There is no reduction in benefits. The interest rate on the certificate is calculated and applied annually. This means that the certificate is continually increasing in cash value.
Any additional money accumulated through the cash build up process can be used to purchase another annuity. This is a great tax shelter that offers some really great benefits. Aside from being a tax shelter it is a insurance and savings plan for anyone who is looking to receive extra money in the years ahead. Investing in the future is the only way to provide a safety net for retirement age.
It take some annuities decades to mature, which is why this type of plan is risky. It normally takes about 20 years for a good plan to reach the state of maturity. The 20 year annuity savings plans can be purchased with a life certificate as well.
In 2009, state insurance commissioners have limited the sale of some or all 20 year annuities and you should check with a qualified professional for availability or for alternatives that may work better for your situation.
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