Safe and Secure - Investing in an Annuity

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Investors have long known that annuities are some of the safest investments in the business. An annuity is formed when an investment is made with an insurance company. The company agrees to take the money that is invested and hold it for the annuitant. Depending on the terms of the contract the annuity may begin paying out immediately or after a certain date or age has been reached. No matter what the situation, the annuity contracts to pay out a fixed amount each month or year for a set period of time once payments begin. The amount of each payment is fixed and will not be reduced. The length of payments is also guaranteed. Truly there is little or no risk with a fixed annuity.
Fixed annuities differ from variable annuities because they are fixed and payments and length are all agreed to in the initial contract. There is no varying once the payments begin. A fixed annuity is created with a single deposit. The amount of the one time deposit, the agreed upon interest and the payout options, taken together, determine the amount of the monthly payments. An annuity that begins paying immediately is called an immediate single payment fixed annuity while one that builds interest is known as a deferred payment annuity. Deferred annuities may provide for a larger monthly or annual payment as the fund has had an opportunity to increase before the first payment is made. Immediate annuities will begin to decrease the fund balance, including principal right away.
Most persons will consider annuities as an asset. Although they are not able to withdraw funds or use the funds for personal reasons the funds in the account do belong to them. The payouts that are received create a stream of income that is guaranteed. Some annuities even guarantee that the income will last for the lifetime of the recipient. There are several companies that will loan against the value of an annuity in return for receiving all or a portion of the payments that are due from the annuity. Many persons consider his selling the rights to the annuity however it s rally a loan against the value of the annuity. Annuities provide safe and secure investments with steady income rights in the future.

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