An annuity is like a pension that you purchase. You give an insurance (or brokerage) a certain amount of money every month when you are younger, and in return they pay you a certain amount of money every month for the rest of your life, usually starting at age 65.

There are many kinds of annuities. Some annuities will start paying you immediately. Almost all annuities have sales charges which you pay to the person who sold you the annuity.

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You need to contact and attorney that can help you.In most annuities you are guaranteed to have your principle. In mutual funds you pay an upfront load for the most part and if money is lost you have to wait it out to make it up or make moves.

A type of investment that guarantees payment of specific amounts at specific times, or a single lump sum payment. Annuities are sponsored by insurance companies and other financial instituitions and sold by agents, banks, savings and loans, stockbrokers, and financial planners.Fixed annuities work like certificates of deposit (CDs); you invest a lump sum, and the insurer guarantees a fixed rate of interest for one to five years.Variable annuities let you direct your investment into fund-like portfolios of stocks, bonds, and cash equivalents. Your return, as with a fund, depends on the performance of the portfolios you choose. Variable annuities come with annual charges.

An annuity is a distribution of money earned on an investment on a set schedule such as quarterly or biannually.

An annuity is a contract between an annuitant and an insurer/ annuity provider in which the insurer provides a series of payments in exchange for a lump sum or series of contributions. An annuity is the only form of investment that provides the investor a guaranteed lifetime income. There is even a base accumulation rate associated with the accumulation phase of an annuity.

Primary objective of annuities

Guaranteed lifetime income is the main objective of annuities. This means that the annuitant will receive a series of payments for the rest of his life. However, some annuities are short-term income options that payout a lump sum to the annuity investor when it matures. Most annuities are advertized as financial instruments that help boost retirement income, but there are many types of annuities on the market that suit various purposes.

Phases of an annuity

An annuity basically has two phases: an accumulation phase and a payout phase. In the accumulation phase, annuity growth is based on the size of the contribution, interest rates (or rates of return) and investment periods. The payout phase is based on the annuitization rate (this is dependent on factors like age and sex) and the size of the annuity fund at maturity. Once an annuity reaches maturity, the accumulation phase ends and the payout phase begins. As mentioned before, some annuities pay out lump sums, others offer lifetime income and most offer a combination of the two.

Types of annuities

There are as many types of annuities as there are annuity providers. Annuities can be divided as follows:

Immediate versus Deferred: The immediate annuity has no accumulation phase, but pays out immediately on a single payment or lump sum.

Fixed versus variable annuities: Annuities that are fixed use a declared interest rate, while the rates of return on variable annuities fluctuate according to market conditions.

There are also equity-indexed annuities, whose rates of returns are adjusted in accordance with recognized indices such as the S&P 500.

A deferred annuity can be fixed or variable. Generally, variable annuity contracts are more complicated and disadvantageous to clients. Annuity providers get higher commission on variable annuity contracts, there are hidden fees and charges and unrealistic projections are typically offered.

An example

Suppose an annuity investor contributes $200 per month to a fixed annuity that has a declared interest rate of 6% per annum for 30 years. At the end of the 30-year period, the annuity fund has $195,000. This fund is then used to purchase a single premium immediate annuity.

Using the annuitization rate ($8 per $1000 cash value), the insurer determines that the annuitant can receive a guaranteed lifetime income of $1,560 monthly ($8 x[195,000/1000). Alternatively, the insurer may offer the annuity investor a lump sum and a reduced income: $48,750 and $1,170 monthly.

Conclusion

Annuities are estate-liquidating financial instruments - particularly immediate annuities. They are ordinary long-term insurance products but they work opposite to life insurance (life insurance creates an estate). Beneficiaries can be assigned to annuities and there is even a provision that allows payments to be made withing a period to designated beneficiaries on an annuity contract.

Basically you pay a lump sum, and get a fixed amount with interest back every month for a certain period.
For example, paying $100,000, and get $1000 a month for the next 20 years.

Before you reach your retirement in your life you must prepare yourself for any unforeseen events that could happen. And the best thing you could do is to decide where you will put your hard earned money that you have for your hard work when you are still young and working. You have the option to save it in a bank or to invest it in an "Annuity". To give you an idea Annuities is an investment and at the same time an insurance policy in one package. There is an agreement between you and the insurance company. You will invest your money to them and let them handle it. Then they will issue you an insurance policy stating the benefits you will receive from them. You may choose to purchase from them a "Life" or a "Joint Life" insurance policy. Whatever is your choice what is important is that when the times comes that you are in need, you already have peace of mind in yourself that you will not have to worry about your finances during your old age.

AN annuity is a type of investment which guarantees a retirement income. Certain annuities start to pay you a smaller payment right away while others wait till the age of 65 and start paying out. You typically pay on these while you are younger and building a retirement portfolio. This kind of investment requires little upfront and even smaller payments every month but it tends to accumulate interest and builds up over time.

Annuities are generally regarded as fairly conservative fixed income instruments. They are designed to remove the risk inherent in 401ks and IRAs. Consider an annuity much like buying a pension for yourself. After you reach retirement age and begin to take disbursements, it provides a steady monthly check in most cases, much like a pension or Social Security.

Annuities can be great to supplement your retirement income. They can also be purchased based on your individual risk tolerance. Some annuities simply give you a guaranteed pay out based on the lump sum you put in, while others give you a variable rate based on market returns. The latter is better for keeping pace with inflation, but it could cause your payments to shrink at some times.

Choose your annuities carefully. Unfortunately, there are lots of small insurance outfits selling them that border on fraud by charging very high fees for little return. Make sure you do your research before actually putting money down on a product.

Read the terms and conditions carefully. Only buy annuities from an accredited, trustworthy insurance company, and make sure it's something you're very certain about, or that it's a product with conditions that allow you to back out relatively unscathed.