What are annuities (in terms of investments)?

Question

i am looking around for different investment options and stumbled upon this one ... i am not at all familiar with what this is, could someone explain?

Answer 1

In its most basic form, an annuity is an investment where you pay either a lump sum, or you pay monthly for a set time period.  Then, at some set date, the flow of money reverses, and you receive money back.  It might be a guaranteed amount for so many years, or for the rest of your life.  Or it might be a varying amount for a certain number of years, or for the rest of your life.  It all depends on how the deal was structured when you signed up.

Some other variables are whether there is a beneficiary, and what happens to any leftover money if you die before it is exhausted.  Say the deal provides $1000 per month for 30 years once you turn 65.  If you die at age 85, there's 10 years of payments left.  Do those go to a beneficiary, or just to the investment company?  This all has to be decided at the start.  It might be worth your time and money to get a competent investment adviser or lawyer or CPA to help you with these choices.

Answer 2

Confused About Annuities?

You're not alone. Many people have difficulty understanding them. The main reason for all the confusion: Annuities may be single or flexible-payment; fixed or variable; deferred or immediate. No matter the type, annuities are financial contracts with an insurance company that are designed to be a source of retirement income. This article will help you decide if an annuity is right for you and help you to choose the type of annuity that best meets your needs.

Read all about annuities at http://www.totalreturnannuities.com/