When I start talking to people about annuities they often think that all annuities are the same, and they have been told by the media that annuities are bad.  Therefore they no longer want to listen to what I have to say.  I could go off on a tangent at this point about why you shouldn’t believe the media but I will save that for another Blog on one of my other sites.  Let me just make it clear at this point NOT ALL ANNUITIES ARE THE SAME!  I would also like to make the point that not every annuity is right for every situation.

Let’s just take a look at all the adjectives they use to describe different annuities;

• Fixed
• Indexed
• Immediate
• Longevity
• Secondary
• Hybrid
• Variable
• Single Premium Immediate
• Multi Year Guarantee

It is easy to see how someone might get confused just trying to figure out which annuity could be beneficial to them. But instead of breaking all of these down right now, I think that we should start with just some annuity basics.

An annuity is in it’s basic form is a cash contract with an insurance company that will  liquidate the original lump sum of money out into installments over a period of time.  All annuities have two distinct time periods.  The first is the accumulation period, which could be between 1 month or up to 20 years.  The second period is the distribution period which again could be in one lump sum or could be sent to you monthly over the entire rest of you life, with many options in between.  The nice thing about annuities is that it removes the worries of market losses and gives most people some peace of mind.

So before you say you don’t want an annuity because they are too confusing or you heard that they are bad, keep in mind that Social Security and Pensions are just that…..an annuity!  If you would like more information about annuities just leave me a comment and I will cover it in an upcoming blog.