Annuities Fixed and Variable

An insurance contract in which the insurance company makes fixed payments to the annuitant for the term of the agreed upon contract, usually until the annuitant dies or otherwise cancels the contract. The insurance company (annuity) guarantees both earnings and principal. These are very common, and generally seem safer to most people, though most investors and registered investment advisors would be wise to research these, as they often are embedded with hidden fees and expenses.

Annuities - Guaranteed Returns from Allianz

I just back from dinner with my local Allianz rep, and realized, among other things, I am in the wrong business! Annuity sales are quite strong at Allianz, and other annuity providers, primarily because of their guaranteed return products. In the past, I have pointed out that these investments are often merely overpriced insurance (read: money markets combines with minimal equity exposure), but give credit to the actuaries, for they have devised some intriguing new offerings.

In the case of Allianz, they offer a program that will guarantee you the "high water mark" over a ten-year period. Not sure what exactly the cost is, but I'm guessing around 1.5% or so. Very interesting. Check with your investment adviser to see if he can provide more details

Should I Roll my 401k into an Annuity

Like almost all investment answers, it depends on your situation. First, a bit of background: When you rollover your 401(k) you are actually converting it to an Investment Retirement Account (IRA). An annuity is a type of insurance that can be held in an IRA. It combines investments with various guarantees, or insurance. There are two main types of annuities. A fixed annuity offers a fixed rate of return for a predetermined period of time. A variable annuity invests in stock and bond funds and will rise and fall in value with the underlying investments chosen.

In my opinion, it is usually not a good idea to put an annuity in your IRA. Since one of the main advantages of an annuity is tax-deferred income, it makes little sense to hold one in your IRA, which is already tax-deferred. However, there are exceptions where an annuity might sense for you:

• If you are retired, or close to retiring, an annuity can provide an income stream you can't outlive. The annuity will essentially create a personal pension for you by providing monthly income for life.
• Fixed annuities may provide a higher interest rate than a CD. So if you are considering a CD for your IRA, you might compare rates with a fixed annuity.
• Variable annuities often provide insurance known as a “death benefit”. So, if the annuity value goes down, the insurance kicks in to preserve the original amount invested. That is an advantage for your beneficiaries that no stock or mutual fund can provide, though it does come at a cost.

Annuities are usually more expensive than other investments and often have surrender charges so they may not be the best choice for every investor. Before you invest in anything it makes sense to analyze the features, costs, and what's right for your particular situation, with your investment adviser.

All About Investing with Annuities

Welcome to All About Annuities where you can learn the details of how to properly invest in Annuities. We will cover both Fixed Annuities and Variable Annuities. Each can have its place in your investment portfolio.

An annuity contract is created when an investor gives a life insurance company money which may grow on a tax-deferred basis and then can be distributed back to the owner in several ways. One of the main characteristic of annuities is the option for a guaranteed distribution of income until the death of the investor. Investments in annuities can be combined with other long-term investments like 401k Plans or 529 Plans. The majority of modern annuity customers use annuities only to accumulate funds and to take lump-sum withdrawals without using the guaranteed-income-for-life feature.

Many people should use financial calculators to determine if, and what type, of annuity is the most appropriate for their situation. Like all investments, annuities are highly dependent on the age and risk tolerance of the investor.

Stay tuned for more....