Financial matters are notoriously confusing. If you’re considering buying an annuity, you already have one, or you’ve acquired one through transference, you probably have a few questions about them. Here are some answers to the most common questions:
What are annuities?
Annuities are basically an insurance product than can later serve as a source of income. The reason people typically buy annuities is to help fund their retirements so that they can live comfortably and stop working at an earlier age. There are two main types: immediate and deferred, which are exactly what they sound like. You can start receiving income right away from an immediate one, but you can’t until a later time with a deferred one. There are also two other options for annuities: fixed and variable.
How can I access the money?
You can receive funds in an annuity lump sum payment, or you can choose to get your payments structured; it all depends on the choices you make. If you want cash right away, you should opt for an immediate annuity. If you want cash fast, variable annuities are not a good option because there are often taxes and charges to access the money early.
Should I sell my annuity?
There are plenty of companies out there that are buying annuities, which might be the right option for you if yours is transferable. People seem oddly committed to their annuities, though, as over 90% of owners still have their first one. If you do want to sell yours, selling is typically done through a broker.
There are a few different types of annuities, but which is right for you depends on your goals and how you plan to use the income from it. Furthermore, if there comes a time that you need those funds right away or just don’t want it anymore, you do have the option to sell.
Do you have any other questions about annuities? Let us know in the comments. For more information see this.