New York Annuity News

Information On Annuities

Confused About Annuities?
You're not alone. Many people have difficulty understanding them. The main reason for all the confusion: Annuities may be single or flexible-payment; fixed or variable; deferred or immediate. No matter the type, annuities are financial contracts with an insurance company that are designed to be a source of retirement income. This pamphlet will help you decide if an annuity is right for you and help you to choose the type of annuity that best meets your needs.

Single vs. Flexible-Payment Annuities

You can purchase an annuity in two ways:
Make one lump-sum payment to purchase a single-premium annuity. If you want to contribute more money at a later date, you will have to purchase another annuity.
Make ongoing contributions to a flexible-payment annuity. You can contribute money at regular or even irregular intervals anytime you want.

Fixed vs. Variable Annuities

There are two basic types of annuities you can buy-fixed and variable.

Fixed Annuities
Fixed annuities earn a guaranteed rate of interest for a specific time period, such as one, three or five years. Once the guarantee period is over, a new interest rate is set for the next period. This guarantee of both interest and principal makes fixed annuities somewhat similar to Certificates of Deposit (CDs) purchased from a bank. Unlike a typical CD, however, an annuity is not backed by the Federal Deposit Insurance Corporation (FDIC); its security is directly related to the financial health of the insurance company that issues the annuity.

Variable Annuities
Variable annuities typically offer a range of investment or funding options. These funding options may include stocks, bonds and money market instruments. The return on variable annuities can go up or down. Your principal and the return you earn are not guaranteed; they depend on the performance of the underlying investment options. If the funding options you choose for your annuity perform well, they may exceed the inflation rate or fixed annuity returns. If they don't, you may lose not only prior earnings, but even some of your principal.

Contact a New York annuity lawyer today and get a free consultation!

	Did You Know?
	A variable annuity has two phases: an accumulation phase and a payout phase. During the accumulation phase, you make purchase payments, which you can allocate to a number of investment options. For example, you could designate 40% of your purchase payments to a bond fund, 40% to a U.S. stock fund, and 20% to an international stock fund. The money you have allocated to each mutual fund investment option will increase or decrease over time, depending on the fund's performance.