A Look into Annuities as an Investment Option

What Makes Annuities The Right Investment Option for Investors?

To achieve success with your investment plans what you will have to do is discuss your financial goals with a personal financial planner. This way you will be able to select financial products which are suitable for your risk tolerance level and help you get desired returns. 
In this context, we will look at how annuities can help you accomplish your investment goals.

Investment in Annuities

What are the main positive features of annuities?

The primary reason why a personal financial planner would suggest annuities as an investment option is that by investing in annuities you are able to create an income stream that continues for your lifetime.
In addition to it, there are also many annuities in which spouse continues to get payments for a specific time period after a person expires.

Different Types of Annuities

personal financial plannerThe positive thing about annuities is that there are different types of annuities that you can select from. In particular, we will examine annuities which are known to provide regular income, commonly known as life, immediate or income annuities.
Let us analyze some details about these annuities.
• Survivor or Joint Annuity: As the name suggests, here the person is assured a fixed amount which will be paid for his or her lifetime. Moreover, beneficiary or surviving spouse continues to receive a certain percentage for their lifetime.
• Life Annuity: The positive thing about life annuities is that here monthly payment that a person is supposed to get remains same for his or her entire life. Moreover, there are also few life annuities in which increment occurs on a yearly basis as per prevailing inflation rate.
• Annuities with a Payment Guarantee: This is very much like the life annuities since here also you will be getting payments for your entire life. In addition to it, in case the person dies before payments are received for a defined time period than in such situation the beneficiary continues to receive rest of the payment. 
Let us look at an example to explain it in a better manner. Suppose, you are supposed to receive payments for 15 years but you expire after receiving just 5 payments. In this situation, your beneficiary will be entitled to get rest of the 10 payments (for the next 10 years).

What are the pros and cons of annuities?

Pros
• You get payments for lifetime irrespective of your lifespan.
• You get more security in comparison to other investment options.
• It proves to be the right option for someone with good health.
Cons
• After payments start, the decision cannot be altered and you cannot utilize funds for other purposes.
• In case your health is not good then return on investment will not be similar to what you can expect to get when you have good health.

A Final Note

To conclude it can be said that annuities can be an excellent investment option for you. All you will have to do is consult a personal financial planner and understand which type of annuity to select from according to your risk tolerance level.
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