Single And Flexible Premium Annuities
Apr 9th, 2010 | By | Category: InvestingAnnuities are investments that are generally low risk, and most have a guaranteed fixed rate of return (with the exception of variable annuities). They are most often used as a means to save for retirement. At retirement age, holders of annuities start withdrawing their funds for either a set period of time or until their death, depending on how the account was set up. Payments can be received monthly, quarterly, annually or biannually and the amount of the payment is determined by the principal in your account and your accrued interest. Since you do not pay taxes as you invest and earn interest, you will need to do so as you withdraw your money.
There are two different ways to fund your annuity. You can either choose a onetime single investment called a single premium annuity or you can choose to make payments into your account over time and those are called flexible premium annuities.
Single premium annuities can be either immediate annuities or deferred annuities. The first, immediate will begin paying out to you almost as soon as you have made the investment. The second, deferred annuities are more long term investments that will begin to pay out at a set time in the future.
Single premium annuities are very often funded by another investment fund that you are looking to roll over or from a large financial gain from some other means. Many times these funds are opened upon retirement and used as a means to manage your money during retirement.
Flexible premium annuities can be started at any time and generally there will be a minimum amount required to open the account. Payments into the annuity can usually be at any time and for any amount. It will however be more profitable in the long run if you make regular investments into the fund. Flexible premium annuities can only be deferred annuities and withdrawals will begin sometime in the future.
