Annuities

What are annuities? Are they a good investment?​

WHAT IS AN ANNUITY?

Annuities are a low risk form of investment entitling the investor to annual withdrawals. Typically, this is a fixed sum of money paid to someone each year, usually for the rest of their life.

They typically provide returns of 3% – 8% per year. You form an annuity by transferring money to a life insurance company that specializes in annuities. Depending on your financial goals, they may invest your money into mutual funds, with guaranteed minimum returns, or they may simply give you a guaranteed rate of return every year. They use guaranteed minimal returns and have built in safeguards, so even if the market crashes, you are protected. At the end of the annuity term, they begin to send you your payments, or you have the option to keep your nest egg where it is, so it can continue to grow.

An annuity is a form of insurance or investment entitling the investor to a series of annual sums. Typically, it provides a fixed sum of money paid to someone each year, usually for the rest of their life. 

Annuities certainly are not for everyone. In order for your money to make money, it needs to stay invested with the insurance company. Usually this period is 5-10 years, or more. Of course, you can opt for more time depending on your age and financial needs. Annuities are built from the ground up, to be versatile for your needs, depending on your financial situation.

You don’t need a ton of money to invest.

A common misconception is that you need hundreds of thousands or millions of dollars to invest in an annuity. You can get started investing in an annuity with as little as $10,000.

What is the process for applying for an annuity?

The process is fairly simple. First, you meet with a state-licensed Annuity specialist. You discuss your options and have all your questions answered. If it’s a good fit, you apply. Typically, you and your agent will meet several times, to make absolutely this important investment is perfectly calibrated.

In the first meeting, you and your agent will review your financials. This is absolutely necessary, as many people do NOT qualify for annuities. Qualification is mainly dependent upon 2 things:

  1. You must have at least $10,000 you will invest/transfer to the annuity
  2. Based on your financial situation, it must be clear that the investment into the annuity will not harm you, financially. Meaning- if you put money in the annuity, most or all of it can stay in the annuity for the annuity term, without you needing to withdraw all the funds within the first 3 years. This is determined by a list of requirements produced by the federal government, to protect you and your financial security.