Annuities

An Annuity is a contract between an individual and an insurance company to cover specific goals, such as lifetime income, legacy planning, or long-term care costs.

Both life insurance and annuities are issued by the insurance companies, but they serve opposite purposes. 

The main difference between annuities and life insurance is that life insurance is designed to provide benefits to your loved ones after you die; while annuities are designed to provide a benefit while you are still living. This makes the benefits from an annuity a guaranteed stream of income.

 

Annuities can provide more tax-sheltered ways to save for retirement if you've already maxed out your 401(k) and individual retirement account, or IRA. 

Premiums can be a single lump sum or a series of payments, depending on the type of annuity. Unlike other types of insurance, you don't pay annuity premiums indefinitely. Eventually, you stop paying the annuity and the annuity starts paying you. 

There's great flexibility in how annuity payments are handled. Annuities can be structured to trigger payments for a fixed number of years to you or your heirs, for your lifetime, until you and your spouse have passed away, or a combination of both lifetime income with a guaranteed "period certain" payout. 

Payments can be monthly, quarterly, annual or even a lump sum. They can start immediately or they can be postponed for years, even decades.