The Different Types of Annuities
The Different Types of Annuities
There are many different reasons why someone may want to purchase an annuity. From managing retirement income to counting on tax-deferred growth of your money, people have good reasons for this type of investment. However, the world of investments and annuities can be intimidating, especially if you don’t have general background knowledge. While you may know you need more options when it comes to your finances, you may not be sure how to navigate what is right for you. Here is some basic insight to the different types of annuities to help you get started. The three main types include variable annuities, fixed rate annuities, and fixed-index annuities.
Variable Annuity
A variable annuity grows your investment and provides you with periodic payments based on the performance of sub accounts that fund the growth of the annuity. This means your payments from the annuity may fluctuate. If accounts are performing well, your payments may be higher, and likewise if an account loses value the payments may be smaller. Ultimately, a variable annuity can provide the opportunity for a higher return but with a greater risk.
Fixed Rate Annuity
A fixed rate annuity is often chosen over others because it generally offers a lower risk. This type of annuity offers a steady growth of your premium investment. A fixed rate annuity may offer a lower return than a variable annuity, but there is usually less risk involved with your investment. A popular form of a fixed rate annuity is a Multi-Year Guaranteed Annuity (MYGA). A MYGA is a type of fixed annuity that offers a fixed interest rate for a specified period of time, typically ranging from two to ten years. MYGAs also offer a way to grow your investment while deferring taxes. Discover our Platinum Assure Series options to find a fixed rate annuity that work for you, or use our calculator to see how much you could earn with a fixed rate annuity.
Fixed-Index Annuity
A fixed-index annuity is tied to a market index, meaning your payout is tied to a market index such as S&P 500 or Nasdaq. Unlike a variable annuity, a fixed-index annuity protects you against losing any of your principal investment if the index declines. It also may set limits on both your gains and losses. A fixed-index annuity and it’s risks and growth may offer the best of both worlds between a variable annuity and a fixed rate annuity.
When investing your money into an annuity it’s important to consider a few things, including how much you’ll be able to invest and when you will need the money. Americo Financial Life and Annuity Insurance Company has options for your financial planning. Contact us today to learn more about whether an annuity is right for you.
Resources:
Types of AnnuitiesWhat Is an Annuity?