Understanding The Importance Of Annuity At AnnuityRatesComparison.org 

Find out how annuity works and why annuity rates comparison is a critical part of purchasing this retirement planning vehicle!

by Derrick Collin Wednesday, April 06, 2011
(Dover, DE)– An annuity is a type of life insurance plan with slight differences. Life insurance is designed to protect the family members against the untimely demise of the insured party. On the other hand, annuity is designed to provide a steady stream of income to retired individuals. There are many types of annuity plans on the market today, which is why it is essential for shoppers to conduct annuity rates comparison to determine what annuity works best for their needs and financial situation. http://annuityratescomparison.org/ offers relevant information pertaining to various annuity types.

There are several other retirement plans like 401(k), traditional IRA, Roth IRA, Roth 401(k) and annuity. When deciding what type of retirement vehicle to choose, it is important to take into account factors like income ceiling, mandatory withdrawals and limits on contribution. Traditional 401(k) and Roth 401(k) are excellent options but the withdrawn funds are taxed. This means a huge chunk of the income is eaten away. Traditional IRS and Roth IRA, on the other hand, come with limits on contribution. On the other hand, 401 (k) come with tax-exempted contributions and the gains are tax-deferred. The contributions for Roth 401(k) are taxable with tax-deferred gains.

Annuity comes with no income ceiling and there are no limits as fat as contributions are concerned. In addition, withdrawals are not mandatory. The annuity earnings are allowed to grow and accumulate tax-deferred. These features make annuity an attractive option for people who maxed out their contributions to other retirement plans and are expected to live beyond the age of 70.

Purchasing annuity requires in-depth annuity rates comparison as the prices vary greatly from company to company. When you conduct annuity rates comparison, you can take advantage of great offers at value prices.

The most common annuity type involves making a one-time payment to the insurance company. However, unlike life insurance plans, annuity plans have no premiums. The insurance company will invest the money on behalf of the annuity plan holder and provides them periodic income either on or before they retire.

Two of the most popular annuity types are fixed and variable annuity. Fixed annuity is one that guarantee rate of return on the invested money. The plan holder may receive a guarantee for the entire amount of money invested but this will depend on the type of fixed annuity purchased. Variable annuity provides a rate of return that depends solely on the plan holder’s ability to select excellent securities portfolio.
It is not common knowledge that fixed annuity, unlike variable annuity, is not regulated by the SEC. Therefore, the strength of the insurance company should be taken into account before purchasing fixed annuity.

Deferred annuity provides period income on retirement and requires regular contributions. The invested money grows over time. It provides regular income after a period of deferral. This type of annuity can either be variable or fixed. Annuities withdrawn at the age of 59 incurs a 10% penalty charge.

However, surrender and no surrender annuities allow plan holders to withdraw up to 15% of the interest earned. Usually, an income tax is levied on any gains during the time of withdrawal. Surrender annuity allows the plan holder to withdraw any amount with any penalty charges.

Any type if investment should be made with careful consideration. When purchasing any type of insurance plans, make sure to compare quotes. When you conduct annuity rates comparison, you will be able to determine which type of plan fits your needs and preference.

Derrick Collin is a regular contributor for AnnuityRatesComparison.org. This site helps shoppers determine the best type of annuity plans for their unique needs.

0    submitted by Derrick Collin
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