What is An Annuity? Annuity Information 101:

Asking yourself “what is an annuity?” An annuity is an investment that’s usually sold or provided by insurance companies.  It is designed to ensure future payments.

Payments may begin immediately upon the purchase or acquisition of the annuity, or they might be deferred until some later time – the day of your retirement, say, or ten years from the original purchase date.

Many personal investors purchase annuities, often at the urging of an insurance salesman, in the belief that it will be the best way ensure future income during retirement.  As you will see, this may or may not be the case.  There are also a great many people who are awarded annuities after winning a lawsuit as part of what’s called a structured settlement.  Having complete annuity information is truly crucial when making the decision to sell your annuity payment.

Annuity Information: Is Selling Your Annuity Right For You?

Whatever situation you may find yourself in, as the holder of an annuity, it’s worth it to take a fresh look at this financial instrument.  Is the guarantee of a steady stream of future income really in your best interests, especially in light of your present financial needs and goals.  Would it be preferable to sell your annuity for a lump sum cash payment now?  Only you can decide
that, but that’s why we’ve prepared Annuity Information 101, so that you can learn all about these types of investments and make an informed choice that’s right for you.

Annuity Information – Fixed Annuity Information:

There are two different types of annuities: fixed and variable.

There are two different types of annuities: fixed and variable.

Fixed Annuity Information: The payee agrees to receive a set amount of money on a fixed schedule.  Essentially you sell a lump sum of money to an insurance company or investment firm, who invests those funds in bonds and other secure fixed income investments, so that you can be guaranteed a fixed monthly payment for a given period of time.
With fixed annuities, you can either set up payments to be released over a fixed period – for example, 10 years.  Or you can annuitize the fund, which means you arrange to receive (usually a lower value) payment every month until your death.  This is the primary reason annuities are generally sold by insurance companies, as they have expertise in calculating how long a given investor is likely to live, and thus, how high or low to set the annuitized payments.

There are many drawbacks to fixed annuities.  For one thing, the amount you receive can never change, not even to keep up with the rate of inflation.  The real value and purchasing power of your last payment will necessarily be lower than that of your first  This is true of annuities that are designed to sunset after a fixed term, but this is even more acutely the case of annuities that are paid out until death.

When you arrange to have your annuity paid out to you until your death, there are even more troubling drawbacks.  Essentially, you agree to receive a set amount each month but the number of payments you receive is beyond anyone’s control.  After your payouts begin, whether payments are made for 3 months or 30 years, they end with your death and your heirs are not entitled to any further compensation.
Annuities often come with surrender provisions that prohibit withdrawal of any money for a number of years (typically 5, 10, and often even more).  In other words, your money is locked up.  Occasionally some companies will have a policy that allows withdrawal in the case of certain hardships, however.

Annuity Information – Variable Annuity Information:

Variable Annuity Information: Variable annuities are even more problematic.  With these kinds of financial instruments, the money you give to the insurance company is placed by them in volatile investments like stocks and commodities.

You are not guaranteed a fixed monthly payout because your funds could grow dramatically or severely decline, depending on the quality of the underlying investment.  One of the benefits here, as with all annuities, is that your money grows tax-deferred: if your investment gains money it is only taxed when the money is withdrawn. However, those gains are eventually taxed as income, and not at the lower rate of a capital gain.

Another potential advantage to a variable annuity is that it can be packaged with an insurance policy that can guarantee the return of the principle, even if the fund loses money.  These kinds of investments generally carry very high fees, however, and your insurance generally only covers that relatively short period before you begin receiving payments.

There is a great deal of controversy over these vehicles, and experts agree that almost all investors are much better off investing in an index fund, which behaves in a similar fashion but has a much more advantageous tax liability.
Remember, in all annuities, the cash is technically not yours.  You are not able to take it out or liquidate it.

Moreover, annuitization is rarely ever done, as the payout is usually quite low (to hedge against your living for a long time).  These, along with all the other serious considerations raised here, suggest that many holders of annuities would be better off selling their future payments for a lump sum of cash now, which would leave them free to use their wealth as they see fit.

Woodbridge Structured Funding, LLC, the sponsor of the Annuity Source, is a leading financial services firm that offers the highest lump sum payments for all types of future annuity payments and annuity information.  With Woodbridge Structured Funding, LLC, you’re guaranteed to receive the highest cash payments for any annuity. If Woodbridge can’t beat your offer, they will pay you $500 Cash!  Just fill out our quick and easy form to get a fast free quote.

If you’d like to find more information on annuities, check out the free advice center at www.woodbridgestructuredfunding.com or call our annuity professionals today!

Call 1-866-865-7044 Today!