annuity buyers

Annuities are a series of payments made by an institution such as an insurance company to the annuity beneficiary (annuity holder) at regular intervals over a fixed period of time. Most annuity buyers come from middle-class families with household incomes of less than $75,000 a year, and their main goal is to earn an income after retirement.

According to a survey, the average age of an annuity buyer is 66 and they are retired. Typically, these individuals believe that their post-retirement financial needs will not be covered by a pension or other employment-related retirement funds. They invest in annuity plans to have guaranteed income. A person can buy an annuity if they receive a lump sum such as a pension, the sale of a piece of land or house, or any inherited property.

A potential annuity buyer, particularly a first-time buyer, should be very careful when deciding what type of annuity to invest in and which insurance company to use. Some annuities offer guaranteed income and some do not. Some annuities offer returns even after the death of the annuity beneficiary, but some types of annuities provide income for only a fixed period of time. Excess income over the full amount of the premium is tax-free in some types of annuities, while in some other cases excess income is taxable. Therefore, the buyer must understand the basic types of annuities to decide which type is right for their financial situation.

The buyer may seek the help and advice of a financial professional or an annuity broker.

Before purchasing an annuity, the buyer should understand the payment options. For example, the company may pay some types of annuities only after the death of the annuity beneficiary and some after a fixed period of time ranging from five to twenty years. Buyer should be aware of front loading fees, annual maintenance fees, and salvage charges. Another important point to know is the credit rating of the insurance company by agencies such as Standard and Poor’s and Moody’s and Fitch. These agencies evaluate the ability of the insurance company to fulfill all your claims on time. After considering all of these criteria, annuity buyers must select the best annuity to purchase and then enjoy.