What Is A Fixed Annuity?

What is a Fixed Annuity? An annuity is a contract from an insurance company to pay money in the future. The company guarantees a fixed rate of return, usually based on some underlying bond crediting rate. The contract is between the insurer and the owner of the annuity contract.

Annuities are used to provide a future benefit in the form of a stream of payments. These payments are made within one year, in the case of an Immediate Annuity. They may also take place at some future date, more than a year, as in a Deferred Annuity.

A Fixed Annuity differs from Variable Annuities because the insurer backs the interest rate earned. A Variable Annuity permits the owner to invest the payments in the market for a potentially higher return. This also means that the owner of a Variable Annuity has a substantially higher investment risk. As such, Variable Annuities are registered security products; fixed annuities are not. One fixed annuity, the equity indexed annuity is also not considered a security.

Fixed Annuities have two distinct phases: accumulation and annuitization. During the accumulation or build-up phase, payments are made and grow on a tax-deferred basis. When the owner decides to receive income, the annuity is "annuitize" or paid-out. Payout can take place all at once or over years based on the life of an annuitant. The annuitant is similar to insured in a life insurance policy.

Annuities are often compared to mutual funds and other investment products. This is a mistake because there are stark differences between the two. To start, Fixed Annuities are not investment products. They provide a way to defer income for a period of time. Their guaranty return is unique and not found with mutual funds that face market risk. A Fixed Annuity has mortality and expense charges that are not found in investment products.

An initial payment into an annuity can be made all at once or over a series of period. These are single pay and fixed pay annuities respectively. Annuities enjoy tax advantages during the accumulation phase and should not be used until age 59 and a half. Taking money out prior to that age for purposes other than a special need may result in penalties and fees. Many Fixed Annuity contracts have what are known as surrender charges. A surrender charge is a declining fee, based on the number of years money is held. They can be as high as 30 percent and last up to 20 years.

Fixed Annuities are useful in planning for such life events as retirement. They may also be used to distribute lump sum payments such as inheritances or lawsuits. These are special Fixed Annuities known as structured settlement annuities. A Fixed Annuity gives ease of mind to a person who is uncertain about the market. They tend to be competitive with bank certificates of deposit but again are unique products.

When considering the purchase of a Fixed Annuity contract you should consult a licensed insurance agent or financial adviser. A competent agent or counselor can provide you with comparative information and help determine the appropriate product. A Fixed Annuity may be valuable addition to your product holdings.

When it comes to a fixed annuity there are a number of things to consider, Is an immediate or equity indexed annuity the way to go? Visit the site for more details.

Fixed Annuities, The New Savings Accounts?

To put it in plain speaking, fixed annuities are savings accounts for the insurance world. When you decide to invest in annuities with your insurance agent, you are agreeing to make payments over time which the agent, in turn, invests on your behalf. The fixed annuities you’ve invested in will gain interest over the years and can accumulate in cash value until the predetermined date you have selected to start receiving your pay-out.

There are five main types of fixed annuities. They are listed below with a brief introduction to each:

1. Single-year guarantee fixed annuities – With this type your insurer guarantees to pay you a specific interest rate for one year which they can raise or lower each year after until the contract ends with what are called “renewal rates.” There are a number of different kinds of renewal rates so ask your insurance agent which ones may apply to you, however in most cases the interest rate will consistently lower with each year.

2. Multi-year guarantee fixed annuities – Here your carrier guarantees a specific interest rate for multiple years which cannot be raised or lowered. With this kind you know exactly how much you’re investing and how much interest you’re accumulating so you can ballpark how much your pay off will be.

3. Market value-adjusted fixed annuities – Perhaps the most risky and unpredictable venture, this variety is based on the market which is beyond your control and could lead to higher rates. There are penalties associated with breaking a market-value adjusted fixed annuities contract that you may want to be aware of so ask your agent before purchasing.

4. Pass-through rate fixed annuities – With this your provider receives a percentage of your fixed annuities and you will be paid the remainder of the interest earned.

5. Floating rate fixed annuities – Here the interest rates vary from month to month and collect value according to the fluctuation rates.

Are Fixed Annuities Right For You?

Go online today to talk to compare insurance quotes and talk to an insurance agent about fixed annuities and whether or not they are right for you. Although they can be complicated, it is best to think of fixed annuities much like a savings account in that you invest money into it and it gains value as a result of accruing interest. If this sounds like something you might be interested in then fixed annuities may be a worthwhile investment for you.

For more information about fixed annuities or for insurance quotes from up to 5 local agents, visit InsuranceAgents.com

Source: http://www.articlesoninsurance.com/fixed-annuities-the-new-savings-accounts/

No Medical Exam Life Insurance

Life Insurance coverage designed for purchase without a medical exam offers advantages and disadvantage to the purchaser.  While many policies are more consumer friendly than in the past, here are some things to consider before you apply.

Life Insurance that can be purchased without a medical exam offers many benefits to a healthy individual that needs coverage quickly, and without the time and effort normally associated with fully underwritten policies.   These insurance carriers are looking for people who want the ease and anonymity of applying online or through the mail.  They also can offer immediate coverage.

 Although most policies underwritten in this way are for relatively low amounts, at least one carrier will consider up to $500,000 within certain age limits.
    
In addition, some carriers will accept credit cards, something most “regular” carriers do not accept for payment.  Again, it is ease of purchase that makes this a tempting offer.

However, many of these benefits come with a cost.  First and foremost, they are generally more expensive than fully underwritten coverage.  While not always the case, especially at younger ages and among some smokers, people at older ages should compare both types of coverage and decide what is most appropriate in their circumstances.

Whatever type of policy you decide upon, remember that all policies have a two year period of contestability.  This means any “material misrepresentation”   of your health, lifestyle or driving record can invalidate your policy and leave your beneficiaries without the coverage you intended.

If you cannot answer the qualification questions appropriately, this type of coverage is not for you.   It does not mean life insurance is unattainable, only that underwriting will be necessary in your situation.  This is when an agent is indispensable to get the best value. 

Leonard Robbins has written additional articles that can help you choose the best policy for your current and future needs.  For more information on the subject of this article, go to http://www.smartlifeinsurance.com

Source : http://www.articlesoninsurance.com/no-medical-exam-life-insurance/