Annuities Explained In Brief

Many intelligent people require annuities explained to them, and still it can be a really difficult concept to grasp. Here, we are not trying to sell you an annuity, merely try and enlighten you as to what are annuities and expand your knowledge so you will be able to ask relevant questions, look out for the pitfalls and not be bamboozled by someone trying to sell you one.

At the basis of an annuity is that you invest money for a particular period of time. When that time has expired, you begin to receive a certain return for a period of time (usually a lifetime). This is a good way to supplement or replace your retirement pension which is often insufficient. Why a pension annuity is often preferred by many, is because a steady return is guaranteed and therefore carries less risk than more traditional investments such as bonds and stocks are more risk prone.

Although others exist, there are basically two primary types of annuity; immediate or deferred. An immediate annuity is one where you invest a significant lump sum and receive monthly payments. In a deferred annuity, you invest monthly and receive monthly payments from a specified date or when the fund reaches a certain amount. If you go for the deferred option, the earlier you start the smaller your payments will be as there is longer for your investment to grow. When your investment is complete, you will receive regular payments.

One thing to consider here is whether you would like to nominate your spouse to receive your payments should you die first, so make sure you check on this as it may fall outside of inheritance taxes depending on which country you reside in.

Here at Annuities Explained we believe the difficult part to come to terms with is the fact that you could lose out with an annuity. This is because if you die before using up the value of your annuity you lose out. However, on the positive side, if you live longer, you are in pocket and the company may lose out over the fees they have already received for setting up the policy! Therefore, it stands to reason when these companies make their calculations; they make an assumption about how long they think you will survive.

OK, so now we are getting tricky your payment for an annuity. This may be a fixed rate where you know exactly what you will get and give you a guaranteed return over time, or a variable rate. With a variable rate, you dont necessarily know exactly what your return will be. The guaranteed return is at a lower rate, but as the funds are tied in to other more variable funds, your final return may, or may not be a lot higher.

We hope that annuities explained in this simplistic way will be of help, but they are by no means exhaustive and we are not financial advisers. You are therefore encouraged to seek the appropriate advice from an adviser whom you trust, or who comes well recommended to you.






 

Annuities News:

 

Structured Settlement Institute: Texas Courts Again Reject Imperial Finance's Anti-Competitive Acts
BOCA RATON, Fla., May 10, 2012 /PRNewswire-USNewswire/ -- Texas courts (1) have once again ruled against Imperial Finance's continued attempts to stifle competition. A Texas court last month rejected for the fifth time Imperial's anti-consumer attempts to prohibit customers from selling their structured settlements to persons other than Imperial. Imperial sought to prohibit its customers from ...


Blending Special Needs Trusts and Structured Settlements - Legal Talk Network

Blending Special Needs Trusts and Structured Settlements
Legal Talk Network
For severely injured plaintiffs and their families, the combination of special needs trusts and structured settlements can help provide financial security to secure future needs. Ringler Radio host Larry Cohen and co-host, Carmella Limongelli discuss .

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Can BofA and SocGen undo MBIA's restructuring? - Reuters

Can BofA and SocGen undo MBIA's restructuring?
Reuters
But the insurer's structured-finance arm, MBIA Insurance, has had to borrow from its better-capitalized municipal bond division, MBIA National, to fund those settlements. Last fall MBIA Insurance took out a $1.1 billion secured loan from MBIA National, .

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Can BofA and SocGen undo MBIA's restructuring?
Of the 18 banks that challenged bond insurer MBIA's restructuring in 2009, only two -- Bank of America and Societe Generale -- remain. On Monday, unless there's a last-minute settlement this weekend, they ...


FSA confirms plans to ban promotion of traded life settlements
Regulator says it EURstrongly recommendsEUR that life settlements do not reach the vast majority of retail clients...


AM Best Removes Ratings of 321 Henderson Receivables V LLC From Under Review - MarketWatch (press release)

AM Best Removes Ratings of 321 Henderson Receivables V LLC From Under Review
MarketWatch (press release)
Proceeds from the issuance of the notes, along with contributed equity capital were used to purchase a pool of structured settlement and annuity receivables (receivables) from the affiliate and to fund the initial reserve requirement.

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A.M. Best Removes Ratings of 321 Henderson Receivables V LLC From Under Review
OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has removed from under review with negative implications the debt ratings on three tranches of securities issued by 321 Henderson Receivables V LLC (Series 2008-3) (the issuer), a special purpose Nevada limited liability company. Concurrently, A.M. Best has affirmed the debt ratings of EURaaaEUR on $74,646,000 Class A-1 8.00% Fixed Rate Asset Backed ...


Evaluating and Negotiating Workers' Compensation Claims - Legal Talk Network

Evaluating and Negotiating Workers' Compensation Claims
Legal Talk Network
They explore the risks and advantages to a claimant and employer in closing a workers' compensation claim, the importance of rated age and how a structured settlement can give injured workers the best of both worlds. Watch all the Legal Talk Network .

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Woodbridge Structured Funding Experiences Record First Quarter in Structured Settlement and Lottery Divisions
Woodbridge Structured Funding, LLC, announced record growth in their structured settlement and lottery divisions during the first quarter of 2012 with a 40% increase in fundings over Fourth Quarter 2011Sherman Oaks, CA (PRWEB) April 30, 2012 Woodbridge Structured Funding, LLC, announced record growth in their structured settlement and lottery divisions during the first quarter of 2012 with a 40 ...





 

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