At its most basic, an annuity is a contract between an investor and an insurance company. The investor gives the insurance company either a lump-sum premium, which is also known as a single premium, or he or she provides multiple premiums over time. The time during which he or she makes multiple payments is called the accumulation phase. In exchange for the premiums, the annuity owner receives payouts for life that are guaranteed. This is called the distribution phase. The payouts are distributed monthly, quarterly or annually, depending on the choice made by the annuity owner. The start date and the amount of the payouts depend on the kind of contract.
An annuity can be fixed, variable or indexed. These can be either immediate or deferred. The kind of annuity that is right for an investor depends on several factors, including the number of years before retirement, the amount of income that he or she will receive from other sources and the other assets such as savings accounts, equities and real estate.
At Southland Insurance and Financial Services we off all types of annuities. Call and set up an appointment to see if one of these products is right for you.