Do You Know What An Annuity Is?
by admin on 24/01/11 at 7:00 pm
Maybe you have heard this word used but didn't know exactly what was being discussed. An annuity is payments of a set size and frequency that is usually paid to someone who is retired. This contract is sold by insurance companies as it provides payments to the policy holder at certain intervals. These payments usually begin after the person has retired.
These payment will be taxed when they begin and if there is money taken out of the account, that is also taxed. Earnings for this annuity cannot be withdrawn without a penalty being charged. There are fixed annuities which will guarantee a set payment but variable annuities will not, but greater returns can be expected from a variable annuity. They are both considered to be safe as low-yielding investments. If the policy owner dies within the accumulation phase, the heir will receive the accumulated money.
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