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Annuity
Filed Under »
Annuity
,
Financial Theory
Definition of 'Annuity'
A financial product sold by financial institutions that is designed to accept and grow funds from an individual and then, upon annuitization, pay out a stream of payments to the individual at a later point in time. Annuities are primarily used as a means of securing a steady cash flow for an individual during their retirement years.
Investopedia explains 'Annuity'
Annuities can be structured according to a wide array of details and factors, such as the duration of time that payments from the annuity can be guaranteed to continue. Annuities can be created so that, upon annuitization, payments will continue so long as either the annuitant or their spouse is alive. Alternatively, annuities can be structured to pay out funds for a fixed amount of time, such as 20 years, regardless of how long the annuitant lives.
Annuities can be structured to provide fixed periodic payments to the annuitant or variable payments. The intent of variable annuities is to allow the annuitant to receive greater payments if investments of the annuity fund do well and smaller payments if its investments do poorly. This provides for a less stable cash flow than a fixed annuity, but allows the annuitant to reap the benefits of strong returns from their fund's investments.
The different ways in which annuities can be structured provide individuals seeking annuities the flexibility to construct an annuity contract that will best meet their needs.
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Articles Of Interest
An Overview Of Annuities
These contracts provide a guaranteed income stream. Learn how they work and their benefits.
Make No-Load Annuities Your Viable Alternative
These alternative retirement funds provide diversification with no fees, so what's the catch?
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Annuities offer security but also lock up your cash. The secondary market could be your key.
Not All Retirement Accounts Should Be Tax-Deferred
It may be better to leave your assets exposed to the tax man when you're saving to retire.
Calculating The Present And Future Value Of Annuities
At some point in your life you will have to deal with a series of fixed payments over time, so it pays to know how to calculate them.
Getting the Whole Story on Variable Annuities
Variable annuities are another way to save money tax-deferred - but don't jump in blindly!
Passing The Buck: The Hidden Costs Of Annuities
These may look like good retirement vehicles, but beware of the fees buried in the fine print.
Annuities: How To Find The Right One For You
Fixed, variable and indexed annuities offer different features. Find out which one fits your needs.
Boost Earnings Through Financial Planning
Meeting more of your clients' needs will help you achieve your financial goals.
Taking The Bite Out Of Annuity Losses
If this investment product has caused you sleepless nights, it's time to consider alternatives.
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