Immediate Variable Annuity – Advantages and Disadvantages
With variable annuities you have a choice of two types of payment options – deferred or immediate annuities. Deferred annuities keep investments for long periods of time and immediate annuities disperse the payment on a monthly basis.
Immediate variable annuity commences payment of dividends right from the very moment it is purchased. Quite often it will come with a life time guarantee of income. The depositor invests a large amount of money in a lump sum deposit; the investor has the option to allocate the funds across a range of assets. There is no lock in rate of return and it changes based on the performance of the assets during the year.
With immediate variable annuity investments there is a positive and negative side to be considered. These are equity based investments and on the positive side your monthly payments can increase substantially in value; on the downside the monthly payments can decrease in value – both are dependent on the performance of your portfolio.
The Advantages Of Immediate Variable Annuities Include:
- This type of investment offers a unique guaranteed lifetime income; it comes with the added advantage of market growth potential. This is extremely beneficial because lifetime investment plans don’t always make provision for a decent living standard 20 years down the line with inflation to contend with.
- Since none of us know how long we will live, providing for the future becomes a bit risky. With immediate variable annuity you have the advantage of insuring against your retirement fund running on empty. Moreover, this type of investment offers growth potential, which is a lot better than a fixed rate instrument.
- Most of us do not like to contemplate death but it is a fact of life! With immediate variable annuity investments, upon your death your beneficiary (spouse or child) will receive the major portion of the money remaining in your account minus any withdrawals or loans due.
Ideally, immediate variable annuity investments are best suited for retirees who can afford to take a few risks to benefit financially from market growth. It provides you with monthly living expenses at a non guaranteed rate of return. To help settle the doubts in your mind you can always request a rate report for one or more of the best insurance providers in town.
On the downside, you should be careful to guard against variable annuity fees, which can be extremely high. Other traps can be the ongoing fees paid out as commissions and contract fees. Immediate variable annuity is not the best choice for everyone but its aggressive marketing (because of the high commission payouts) makes it seem like a fantastic option.
Investment advisors warn against putting too much money into immediate variable annuities to avoid spreading yourself too thin. This holds good really for any type of investments you plan on making. Before you invest it is recommend that you learn all you can about the investment plan, how it is structured and how it works; the positives and negatives associated with it and most important the type of payment you can count on.
Robert Eldridge holds over a decade of experience as a multiline agent in multiple states and currently serves on the membership council of the National Association of Insurance and Financial Advisors. Robert has the unique blend of in-depth knowledge in the Medical, Life, Annuity and Mortgage industries. He is also a true philanthropist who works extensively to raise money and awareness for the Shriner’s Hospital for Children.
Robert’s clients value his insight into recognizing optimal solutions to their healthcare and financial needs in this evolving financial market. Staying current with changes in the industry, coupled with his experience and insight into excellent customer service, his philosophy is never selling a product unless it brings an added benefit and true value to you and your family.
Please visit http://www.annuitycampus.com for more annuity information.
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