You have worked your whole life, paid off most of your debts, and raised your family the to the best of your ability, so now what? Most of us are looking forward to retirement, only to be told that Social Security will be depleted by the time that day comes, even though you have paid into it for all of those years! If you are as concerned about this eminent threat as we are, perhaps you should check into a life annuity. Life annuity is merely a contract between you and a financial institute, most commonly an insurance company, where you pay into an account and are reimbursed in payments during retirement. Annuity rates vary from company to company, and are usualy based on whether you choose a fixed rate annuity or a variable rate annuity. Although a variable rate annuity may have a better interest percentage rate at the time of the contract, the rate is usually temporary, and may go down before dispursements begin. Where as a fixed rate is much more reliable and should remain the same up to the time the contract is due to expire. For the most part, a life annuities distributions will end at the time of death, although you may opt to choose a joint contract that would allow payments to continue after death to a spouse or other dependant. We recommend that you purchase a guaranteed life annuity, which will pay even if you die before the annuity is set to expire. In such an instance, the remainder that is still owed to you would go to your estate or beneficiary.Plus as an added bonus, should you out live the expiration date, it will continue to pay up to the point that you do pass on. Another thing to consider with a guaranteed annuity is that in many cases for an additional cost you can purchase death benefits. That can come in handy as a back up to your life insurance policy. We also recommend that you avoid small unknown or little known insurance companies, and that you avoid using a company that offers a long surrender period only. A small unknown company may not have the equity to honor all of its contracts and in some cases may even pose the danger of bankrupcy. It stands to reason that a well known company will have a larger client base making it much more reliable in the long run. A more well known company will also offer shorter surrender periods. A long surrender period could mean the difference between collecting payments at retirement or having to wait until well after you have already retired to receive dispursements. Most annuities are paid into on a monthly basis, although you can also choose to make a lump sum payment, which may be the case should you have money owed you from a personal injury law suit for instance. A life annuity can also be used as a means to defer taxes should you have taxable gains. If they are put into an annuity, the taxes will not be due until the time os dispursement. In conclusion, if you can afford the monthly payments, a life annuity can be a lucrative asset during your golden years. However, as with any investment, whether it be long or short term, it would be well worth the additional cost to consult a professional to see what type is best for you.
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