Part of this blogs revenue comes from sponsored reviews and today in my ever continuing education of the planet we’ve agreed to call “Earth”, the topic of interest is Annuity Rates. Now, I may be revealling a little bit of my “Rose colored glasses” appoach to life but before today, I had no idea what Annuity Rates were.
Actually, I didn’t know what an “Annuity” was to start with let alone add “Rate” to that little ditty.
Why? Because I, well simply, never really cared about that stuff until I knew I could make some money by caring! I know one of my personal training clients “Paul” is going to read this and laugh at me.
At any rate, where did I go to do some research.. well of course king google. If you type in “Annuity Rates”, you’ll end up at http://www.freeannuityrates.com/
This is where I learned that an “Annuity” is
“A regular stream of level payments, whose duration may be specific or indefinite. In the United States, the word has come to be identified with multi-purpose insurance contracts terminating in a payment stream.”
I’m sure that is completely accurate but reading that just made my eye brows scrunch.
In english an another stab at defining Annuity is “In discussions of finance, usually in connection with the valuation of the stream of payments, taking into account time value of money concepts such as interest rate and future value.”
Here is where it starts to hit home a little:
“Examples of annuities are regular deposits to a savings account, monthly home mortgage payments and monthly insurance payments. Annuities are classified by payment dates. The payments (deposits) may be made weekly, monthly, quarterly, yearly, or at any other interval of time.”
Aha! So we pay money at regular intervals… got it. Anything else? Yup!
What Is An Annuity Used For?
Retirement saving is a very common motivation for the purchase of an annuity contract. The prospective retiree wants to provide income for the future, minimize the risk of losing wealth and suffering fluctuations in income. Thanks to the annuity, the holder can achieve not only tax-deferred growth of savings but the assurance of a lifelong income as well.
NOW I SEE…
So you pay in what you can and it’s dolled back out to you at regular intervals when you need it later but in the mean time it was protected from the tax monster. Cool I guess.
Which brings us to the close…
Annuity Rates
Any time you have several suppliers of a product of which Annuity Contracts are one, you’ll have competition. With this comes different rates, advantages and disadvantages given your personal situation. This is what AnnuityRates.com says:
“Fixed, variable, or indexed? In other words, how well do you tolerate risk? With a fixed annuity, the insurance company guarantees the rate of return at the time you purchase your annuity, and it will continue growing at that safe and secure rate for as long as you or your heirs own it. The return is modest, but it is armor-plated against stock or bond market meltdowns. Variable annuities raise the gamble considerably, tying your annuity’s growth to stocks or mutual funds;, in a down market you suffer long earnings droughts. An indexed annuity splits the difference, attaching your rate of return to the Standard and Poor’s Stock Market Index or one of the other reliable barometers of investment growth. Indexed annuities, however, come with guaranteed minimum returns.”
Oh… there’s more so if you are interested and want to learn more about the other variables, you can go here to learn about Annuity Contracts and use an Annuity Calculator of several different companies.
Good luck… My head feels like cramping…
P.S. If any of this information needs correcting, just let me know. This is my first step at understanding this sort of financial stuff.
