Why purchase an annuity

So you should think carefully before you go ahead. More about annuity options. You can use our service to get quotes from annuity providers on the open market in one go. Make sure you provide your health and lifestyle details when you apply. You could qualify for an enhanced annuity if you do.

In fact, last year more than half of our annuity clients qualified for a higher income. Internal Revenue Service. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page. These choices will be signaled globally to our partners and will not affect browsing data. We and our partners process data to: Actively scan device characteristics for identification.

I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Part Of. Annuities Overview. Types of Annuities: Part 1. Types of Annuities: Part 2. Calculating Present and Future Value. Tax Implications. Payouts, Distributions, and Withdrawals. Benefits and Risks. Table of Contents Expand. What Is an Annuity? How Annuities Work. Special Considerations. Types of Annuities. Criticism of Annuities. Annuities vs. Life Insurance.

Example of an Annuity. Who Buys Annuities? What Is the Surrender Period? Common Types of Annuities. Key Takeaways Annuities are financial products that offer a guaranteed income stream, usually for retirees. The accumulation phase is the first stage of an annuity, whereby investors fund the product with either a lump-sum or periodic payments. The annuitant begins receiving payments after the annuitization period for a fixed period or for the rest of their life.

Annuities can be structured into different kinds of instruments, which gives investors flexibility. Pensions also provide guaranteed income, but few employers offer them.

You also may be able to purchase a guaranteed lifetime income rider for an additional fee when you buy the annuity.

These options can help guarantee your long-term financial security. Most annuities have features that allow you to pass the value of your contract directly to your beneficiaries, usually without the proceeds going through probate. You may also be able to designate that a beneficiary receives guaranteed income payments for a certain period or a lump sum. My former role was training financial advisors, including for a Fortune Global insurance company. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you.

Employer-sponsored plans such as a k , b or Keogh are an important part of planning for retirement. Moreover, your social security and defined-benefit pension if you have one may provide less than you need to retire. Remember that the purchasing power of defined-benefit pension income is eroded by inflation. Help you diversify your investment portfolio.