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What does 'annuity' mean?
-noun, plural -ties. 1. a specified income payable at stated intervals for a fixed or a contingent period, often for the recipient's life, in consideration of a stipulated premium paid either in prior installment payments or in a single payment. 2. the right to receive such an income, or the duty to make such a payment or payments.
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There can be a few different definitions but in short as it applies to insurance or financial services:. Two Main Annuity Types: Immediate and Deferred . The difference be…tween deferred and immediate annuities is just about what you'd think. . With an Immediate Annuity your income payments start right away (technically, anytime within 12 months of purchase). You choose whether you want income guaranteed for a specific number of years or for your lifetime. The insurance company calculates the amount of each income payment based on your purchase amount and your life expectancy.. A deferred annuity has two phases: the accumulation phase, where you let your money grow for a while, and the payout phase. During accumulation, your money grows tax-deferred until you take it out, either as a lump sum or as a series of payments. You decide when to take income from your annuity and therefore, when to pay the taxes. Gaining increased control over your taxes is one of the key benefits of annuities.. The payout phase begins when you decide to take income from your annuity. For most people, this is during retirement. As your needs dictate, you can take partial withdrawals, completely cash-out (surrender) your annuity, or convert your deferred annuity into a stream of income payments (annuitization). This last option is essentially the same as buying an immediate annuity.
Technically, the term "annuity" means "a series of payments over time, where the original investment and interest will be distributed over the annuity payout period". However,… most people, when they use the term "annuity" are referring to a COMMERCIAL ANNUITY - a contract between an issuing insurance company and the purchaser. There are two basic types of commercial annuities: IMMEDIATE - These contracts guarantee an income for either a specified period of time ("Period Certain" annuities) or for the life of the "annuitant" ("Life Annuities"). The annuitant is the person whose age and sex determines the amount of the annuity payments. An immediate annuity may be "fixed" (guaranteeing a specified amount of money each year) or "variable" (guaranteeing an income, the amount of which will vary with the investment performance of the investment accounts chosen by the purchaser). DEFERRED - These contracts have two phases: (a) the Accumulation phase, during which the annuity will earn interest, and (b) the Payout phase, during which payments will be made to the annuitant either for a specified period or for life (the payout phase acts like, and is taxed like, an immediate annuity). Deferred annuities may be either "fixed" (where principal and a minimum rate of interest is guaranteed) or "variable" (where the value of the contract will vary with the investment performance of the accounts chosen by the purchaser. For more information, see "The Advisor's Guide to Annuities" by John Olsen and Michael Kitces (National Underwriter Co., 3rd ed., 2012) Answer 2 . Series of payments at fixed intervals, guaranteed for a fixed number of years or the lifetime of one or more individuals . . Similar to a pension , the money is paid out of an investment contract under which the annuitant(s) deposit certain sums (in a lump sum or in installments) with an annuity guarantor (usually a government agency or an insurance firm). . The amount paid back includes principal and interest , either or both of which (depending on the local regulations ) may be tax exempt . An annuity is not an insurance policy but a tax-shelter . While the interest component (the taxable portion) of a regular annuity payment may be exempt from local or state taxes, it is never, under current law, exempt from Federal income tax. Moreover, to say that an annuity is a "tax shelter", rather than an "insurance policy" is not quite correct. First, an annuity is not a tax shelter, as that term is ordinarily used, because it does not EXEMPT any otherwise taxable income from Federal tax; it merely provides tax DEFERRAL. Moreover, many components of an annuity are, in fact, INSURANCE. An annuity contract is not LIFE INSURANCE, and does not enjoy the same tax treatment of a life insurance policy (e.g.: an income tax free death benefit), but the RISK TRANSFER characteristics of an annuity are certainly "insurance". (John Olsen)
I'm in the same boat. I have an annuity credit of 25k on my bank statement at BOA. I called them and I asked the branch rep! No one knows. The only think I am leaning toward i…s.... it had something to do with our initial deposit. My 1st deposit to my small biz account was 25K. Its weird tho because the 25k has been on every statement since I opened the account in 10/07.
a perpetual annuity is an annuity that continues forever- it has an infinite life.That is every year from its establishment this investment pays the same dollar amount.An exam…ple of a perpetuity is the dividend stream on preference shares.
That means that if your husband predeceases you then the annuity payments would go to you as the survivor.
According to www.retireright.co.uk , anyone who has someform of retirement income which is capable of being paid out in alump sum can have an an annuity. . Think of an annui…ty as swapping your pension for a consistent,usually-monthly, payment of money for your post-work life.
This is a type of plan that will make scheduled payments of income to you over a period of time that you choose by making an investment into the annuity plan. You can find som…e information about the taxation of the distributions amounts from an annuity by going to the IRS gov web site and using the search box for ANNUITY
Currently the following options are available under LIC's immediate annuities: 1. Annuity for life : The annuity is paid to the life assured as long as he/she is alive. …2. Annuity Guaranteed for certain periods: The annuity is paid to the life assured for periods of 5 or 10 or 15 or 20 years as chosen by him/her, whether or not he/she survives that period. After the chosen period, the annuity is paid to the life assured as long as he/she is alive. 3. Annuity with return of purchase price on death: The annuity is paid to the life assured as long as he/she is alive. On the death of the life assured, the purchase price of the annuity is paid as death benefit. The purchase price includes the Sum Assured under the Basic Plan, the accrued Guaranteed Additions and any accrued bonuses, excluding the commuted value, if any.
Annuity rates allow you to pay off a specific amount of money over an extended period of time. If you don't have all the money at one point, you can gradually pay it off later….
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If this a payment to you from your annuity then the total amount of the payment being made to you is from the interest you made during the growth of the annuity. Since the int…erest grew tax-deferred you must pay the taxes owed on that portion when it is removed from the product. It seems that the company is using the LIFO method of distribution which is Last In First Out. This means that any interest added to the product will be paid out first in most cases whereas taxes will be do on that money since you have not already paid taxes on this growth.
A Variable Annuity is an insurance contract in which at the end of the accumulation stage, the insurance company guarantees a minimum payment. The remaining income payments ca…n vary depending on the performance of the managed portfolio.
An insurance annuity is a financial product in the form of an insurance product according to which a seller makes a series of future payments to a buyer in exchange for the im…mediate payment of a lump sum or a series of regular payments prior to the onset of annuity.
A retirement annuity will give you a guaranteed income after you retire. If the annuity is owned by an insurance company then they will have control over your money so it is i…mportant to shop around for the best deal.
A charitable gift annuity involves a contract between a donor and charity. The donor gives property or cash in exchange for a tax deduction, When the donor dies the charity ke…eps the gift.
What is a life annuity? A life annuity provides a regular income stream. You will enjoy a steady stream of income for life along with the security that you will never outlive… your money. You'll never have to worry about market fluctuations or other investment management decisions. How does an annuity work? You simply deposit a lump sum of money and receive a guaranteed income stream for life. This income can also be guaranteed for a specified period of time in case the annuitant or annuitants die pre-maturely. What are the factors that affect annuity rates? Gender Your age (and for joint cases, your spouse's age) Current bond interest rates Lump sum amount used to purchase the annuity Types of funds used, either registered or non-registered The length of time the payments are guaranteed Deposit and income start dates. Calculate your Annuity at LifeAnnuities.com