Facts on Selling Annuities
Why People Avail of Annuities:
Continuing Fund
One of the most common reasons why people avail of annuities is to guarantee a stream of funds throughout their lifetime. They purchase annuity plans and then manage these annuities to sell for profits.
Benefits to Your Heirs. Buying an annuity plan can be used to secure income for beneficiaries. Upon the death of the annuitant, the beneficiaries will have the right to the proceeds of the plans. This will secure a good future to heirs.
Tax Advantage. Purchasing annuities has a tax advantage. Interest generated from annuity plans is not taxed until the funds are withdrawn. The tax deferred will be paid throughout the term of the payout.
Differnt Kinds of Annuities...
As to how many deposits a client pays into the annuity:
Single-Premium Annuity allows only one deposit in an annuity contract.
Flexible-Premium Annuity allows policy owners to require additional contributions at any time during the duration of the contract.
As to when the payment starts:
Immediate Annuity requires an immediate payment in a contract, usually within a year of the contract date.
Deferred Annuity does not require an immediate payment, rather, a future-payment usually beginning a year after the contract date.
As to the type of money placed in the annuity contract:
Qualified Annuity the money placed as payments in an annuity contract is pre-taxed.
Non Qualified Annuity the money placed in an annuity contract has already been subject to income tax.
As to how interests are credited to the annuity contract:
Fixed Interest Rate Annuity offers a fixed interest rate (comes with a guaranteed minimum) over a certain period of time to the annuity owner.
Indexed Annuity offers an interest rate that is tied to an outside index.
Variable Deferred Annuity offers the annuity purchaser to participate in investments of annuity funds.
Parties to an Annuity
Annuity contract owner a person or a legal entity who purchases an annuity contract. The person or entity that acquires the annuity will have all the legal rights to the contract. He pays the premiums, chooses which optional policy features included in the contract, and has the right to withdraw or surrender the annuity he purchased. He also has the right to designate the annuitant and the beneficiary of the annuity contract.
Annuitant the person who holds the contract and to whom the title was designated. Proceeds of the contract are given to the beneficiary upon the annuitant's death. An annuitant should be a living person. He is not given legal rights to the annuity contract. The owner and the annuitant may be the same person.
Beneficiary the person or the legal entity that will inherit the annuity proceeds upon the death of the annuitant. He, too, has no legal right to the contract and can only claim the right to the proceeds after the annuitants death.
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