Types of Annuities
The annuity market has various types product available. Each has its own set of costs and features. Immediate and deferred annuities are the two basic forms of annuities. In case of an immediate annuity, the payouts are provided at once. The payouts depend on the contract terms, and can continue for life or a certain period of life. Deferred annuities are of two basic types, fixed and variable.In case of a fixed annuity, a guaranteed interest rate is provided over a specific period that varies from 1 to 5 years. What is a variable annuity? Where variable annuities are concerned, the interest rate depends on the value of the underlying investment and can change according to it. For investment purposes, variable annuity investors can choose from money market funds, bond and stock for diversifying portfolios or managing risk. Variable annuity tax must also be considered when undertaking this form of investment. Given the rapidly developing annuity market and volatile financial markets, it is no surprise that variable annuities have really taken of.