Investing in annuity insurance is a handy option for most of the investors who are willing to keep a substantial portion of their financial assets in the form of this investment. You will be surprised to find out that there are several annuity schemes and patterns than what you come across in your daily life. But, some of the most shared types of annuity insurance are fixed, indexed and variable annuities. If you dig in a bit deeper then you will come across various annuity products that are being offered by variety of companies.
The annuity products have some shared characteristics, which can be found in every one of them. Tax deferred growth or escalation is one such particular characterize. The annuity insurance is a assistance provision given by the government, but like other investment instruments offered by the government, it has certain disadvantages also. One such disadvantage is that if you withdraw any amount of cash from the annuity insurance fund value before the completion of 59 years, then you will not only have to pay taxes but also 10% penalty for the growth or escalation. As the financial allotments of the annuities rely on LIFO rules, the IRS gives dominant importance to interest.
Selecting the right annuity insurance can be grueling at times but you can thin down the selection by deciding exactly what you are looking for in your product. One of the easiest products to understand is the fixed annuities. The fixed annuities are often compared to CDs. The rate of return is fixed and there is no risk involved in this kind of annuities because the rule grows irrespective of the market fluctuations. Unlike the CDs, annuities provide the advantage of withdrawal before the date of surrender. Both annuities and CDs provide investors with the advantage of taking the interest part year by year.
Variable annuities are based on mutual funds as their dominant funding means, but there are many which have fixed funds on the interior. The annuity insurance of this kind unlike fixed annuities has fluctuating rule. There are certain variable annuities which offer riders that guarantee specific percentage of return or a minimum amount. The investors have to pay a small amount for the riders, but considering the fluctuations in the market they are well worth the cost.