Simply stated, an annuity is a financial product sold by insurance companies that allows you to put aside money, have it increase each year without paying taxes, and then trigger a stream of future payments on a timetable you may control. Those payments are taxed as ordinary income. Unlike IRAs, there is no income limitation on how much you can place in an annuity.
Types of Annuities
Annuities fall into two basic categories, immediate and deferred. An immediate annuity begins paying a stream of income upon receipt by insurance company and deferred paying out sometime in the future either by scheduled payments or lump sum upon maturity.
Educaton, Education, Education
The challenge among most financial products is a lack of understanding by the consumer. Whether you are talking stocks, bonds, mutual funds, certificates of deposit or annuities, consumers need to know the ins and outs of what they are getting.
There is more scrutiny amongst the providing of financial products now more than ever and that's good for the consumer.
Find out how an annuity can be a piece of your financial puzzle.