The ABC's of Single Premium Annuity

An annuity is something you will put a considerable amount of your hard earned money. It is only natural that you should know the ins and outs of this so called investment.

In terms of receiving payouts, it can either be a single premium annuity or a flexible premium annuity. Depending on which attracts you the most, it is important to know how to set up your single premium annuity.

Aside from the money you will need to fund your annuity policy, you it is good to seek the advice of an expert. A good insurance agent should be able to know the most suitable product for you basing on your standard of living and well being. Also, your annuity agent should be able to prepare the necessary documents and help you decide on the proper amount needed to fund a single premium annuity.

Next, it is recommended to choose a single premium annuity if you have a lump sum of money. It can be from your retirement account or saving. But either way, you will need an income to support you for a designated period of time.

If the financial institution you have chosen offers a guaranteed rate, then opt for it. You will be enjoying this guaranteed interest rate for an exact time and you will be surprised that it is always significantly higher than what you can find with typical savings accounts.

Upon setting up the policy, carefully decide on how frequent you would like to receive your payout. In order to help you determine this, assess how your retirement needs might be. It can be monthly, quarterly, bi-annual, or annual payments. A single premium annuity is especially helpful for those who seek a low-risk investment. If you are near retirement age or you do not feel comfortable in recovering from a large loss, then such option is for you.

In selecting the company to get your single premium annuity from, thoroughly research the profile and history of the financial institution you will be getting your policy from. They must have sufficient funding on hand and guaranteed to pay out for every security they have issued. Take note that all insurance companies are regulated.

If you think that you will needing the principal amount of your investment before you are 59 ½ years old, then you might consider putting your money in another type of investment. Why? It is because if you surrender your annuity before the agreed date of maturation or before the retirement age, then you will be subject to a 10% surrender charge.

Last but definitely not the least; opt for a single premium annuity which offers an installment refund. This will make sure that the unused portion of the principal amount will still be paid as a benefit to your heir.