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Annuities
Annuities are financial products designed to grow an individual’s funds and later, upon annuitization, to distribute payments back to the individual over a specified period of time. It is mainly used to secure a steady flow of cash during retirement.
849 Questions
What are some names of vanguard variable annuity profiles?
Here are some of the vanguard variable annuity portfolios are VVA-Balanced, VVA-Capital Growth, VVA-Diversified Value, VVA-Equity Income, and VVA-Equity Index.
Will you earn a higher interest rate with a variable annuity than with a fixed annuity?
Yes, you do earn a higher interest rate with a variable annuity than with a fixed annuity. It depends on what kind of interest rate you have at the moment.
Can you find your variable annuity online?
As with many other topics, you can find a lot of purchase information for variable annuities and insurance in general online. Purchase information is available from a wide range of insurance providers, including Prudential and Vanguard.
What are the benefits of a variable annuity?
A variable annuity is beneficial in an economy such as ours now. That way, when interest rates rise (however many years that will take), your annuity will also be at a higher rate.
What is variable annuity most useful for?
A variable annuity is a contract between you and an insurance company, under which the insurer agrees to make periodic payments to you, beginning either immediately or at some future date.
What is transamerica variable annuity?
A Transamerica Variable Annuity is a fixed system of payment, based on a minimum monthly payment, that ensures payment to individuals during and after retirement.
What is transamerica variable annuity and what are their yields?
Tranamerica is an insurance company that offers variable annuity. Their yield depends on the situation of the person. If a person qualifies for annuity.
Are prudential annuities a safe choice for your pension?
Prudential is a well-known, well established company, but to get the best fit and return that you require, make sure you speak with a few financial planners so that your investments are safe and help you prepare for the future that you want.
Where can you learn about prudential annuities online?
The best place to learn about prudential annuities online is from Prudential Annuities's official website. There you can find general info about the company as well as contact info, a list of products, and career opportunities.
What is a no load variable annuities?
No-load variable annuities does not require investors to pay commission, although they may be charged many other fees. This concept is related to no-load investment.
What are ING variable annuities?
ING variable annuities are annuities offered by the company ING which have variable rates of return. This is in contrast to fixed annuities which offer some sort of guaranteed rate of return over the life of the contract.
What is the interest rate on a ing variable annuity?
The interest rate on an ING variable annuity account as obtained via their official company website is anywhere from the 2.5 percent to 3.5 percent range.
What is ING variable annuity for?
ING variable annuities are long-term investments typically used for planning for retirement. The insurance company pays the insured but the value of the fund fluctuates with the market and isn't guaranteed.
What companies sell Hybrid Annuity?
All reputable annuity suppliers will provide a hybrid annuity. Please talk to your financial adviser to select the best one for you.
Some people may not realise that a hybrid annuity is nothing more than a name for a fixed index annuity with a guaranteed lifetime income rider. An investor buys units of a variable annuity and the balance of his portfolio is used to buy units of a fixed annuity.
How many insurance companies sell annuities?
Most Insurance companies sell them. Annuity by definition is a contract sold by an insurance company. They are relatively safe investments but are full of hidden charges, high commissions, annual fees and insurance charges and surrender charges for early withdrawl.
How do you calculate annuity payments?
An annuity is a series of equal cash flows over time that comes at regular intervals. The cash flows must be either all payments or all receipts, consistently occur either at the beginning or the end of the interval and represent one discount period. Payments made at the beginning of the period indicate an "annuity due" which can include rents and insurance payments. Payments at the end of the period indicate an "ordinary annuity" which include mortgage payments, bond payments, etc.
Although loan payments, mortgages and similar financial instruments can be regarded as an annuity, the term is mostly applied from the perspective of being an asset. For example, payments from a lottery or distributions from a lump-sum amount can be considered as an annuity. Annuities can also be an investment used to guarantee a regular income during a retirement.
Calculating annuity payments can come from two perspectives: the future value of an annuity or the present value of an annuity.
Calculating Ordinary Annuity Payments From Future ValueIf the desired ending amount is known together with the discount rate and number of periods, the payments can be calculated as follows:
PMT = FV / (((1 + r)^n - 1) / r)
Where:
PMT = Payment amount made at the end of the period
FV = The future value of the annuity (how much the balance will be after all payments have been made)
r = the discount rate
^ = raises the value to the left to an exponential number on the right
n = the number of payments
In this calculation, the present value (PV) is assumed to be zero.
Calculating Ordinary Annuity Payments From Present ValueIf the sum of money or balance on hand is known together with the discount rate and the number of periods, the amount of payments to reduce the balance to zero can be calculated as follows:
PMT = PV / ((1-[1 / (1 + r)^n] )/ r)
Where:
PMT = Payment amount made at the end of the period
PV = The present value of the annuity (how much is currently on hand)
r = the discount rate
^ = raises the value to the left to an exponential number on the right
n = the number of payments
In this calculation, the future value (FV) is assumed to be zero.
Calculating Annuity Due Payments From Future ValueBecause the payment earns interest for one additional period than the ordinary annuity, the future value should be adjusted as follows:
FV annuity due = FV ordinary annuity X (1+r)
The new value for future value can now be inserted in the original equation to compute the annuity due payments.
Calculating Annuity Due Payments From Present ValueTo remove the additional discount period for each payment made on an annuity due, the present value of the annuity must be adjusted as follows:
PV annuity due = PV ordinary annuity X (1+r)
The new value for future value can now be inserted in the original equation to compute the annuity due payments.
Alternate Methods
Because calculating the payments for ordinary annuities and annuities due, a financial calculator such as the HP 10bII can be used to simplify the process. When many calculations must be performed, the process can be expedited through the use of a spreadsheet such as Microsoft Excel which is equipped with time value of money functions.
See the related links below for an annuity calculator for different types of contracts that compute the balance, distributions, or present value using the amounts you specify.
To calculate the Present Value (PV) of an ordinary annuity, you can use the formula:
[ PV = P \times \frac{1 - (1 + r)^{-n}}{r} ]
where ( P ) is the annual payment (3000), ( r ) is the interest rate (0.04), and ( n ) is the number of payments (5). Substituting these values into the formula gives:
[ PV = 3000 \times \frac{1 - (1 + 0.04)^{-5}}{0.04} \approx 3000 \times 4.4518 \approx 13355.39 ]
Thus, the Present Value of the ordinary annuity is approximately $13,355.39.
What is the account established by the insurance company to handle variable contracts?
The account established by the insurance company to handle variable contracts is known as a separate account. This account is distinct from the insurer's general account and is used to hold the assets associated with variable life insurance and variable annuity products. The separate account allows policyholders to allocate their premiums among various investment options, with the performance of these investments directly impacting the value of the policy. This structure helps to manage investment risk while providing policyholders with flexibility in their investment choices.
Should annuity be wrap into a IRA or Roth IRA?
An annuity certainly can be purchased in an IRA, but one of the benefits of an annuity is tax deferral which you already have with an IRA. So as long as you understand that there are no additional tax benefits when placing an annuity in an IRA it may be an appropriate investment.
What are fixed annuities comprised of?
A fixed annuity is an annuity that pays a fixed amount of interest, defined by the terms of the contract. It is comprised of the money that you put in and the interest the insurance company provides in exchange.
How much of an annuity is taxed?
I am not a tax advisor and you should always seek the advice of a professional, but, having said that, generally speaking, qualified funds in an annuity, with a qualified tax plan, such as an IRA are fully taxable when you take receipt of the funds. Non qualified funds in an annuity, are taxed only on the gains. These are guidelines only. Please seek the advice of a qualified professional tax advisor.
How TO borrow money from AN annuity?
To understand the consequences of borrowing from a deferred annuity (one in which annuity payments are not scheduled to commence within one year of issue), one needs to know if the annuity is being used to fund an IRA or "qualified plan". If the annuity is funding an IRA, no borrowing is permissible, because IRA rules do not permit borrowing from one's IRA. If the annuity is funding an employer-sponsored retirement plan (such as a 401(k) plan), borrowing may or may not be permitted by the plan (and the annuity contract).
If the deferred annuity is being purchased with after-tax dollars, not in an IRA or employer-sponsored plan, then borrowing is not forbidden by law, but most deferred annuity contracts do not allow it.
It should be noted that borrowing against such an annuity, or even pledging the annuity value as collateral for a loan (such as, from a bank) will cause the untaxed "gain" in the annuity to be taxable in the year of the pledging (up to the value of the amount borrowed) (IRC 72(e)(4)).
What is the maximum withdrawal amount from an annuity per year at age 62?
The maximum withdrawal amount from an annuity at age 62 varies based on the type of annuity, the terms of the contract, and the amount invested. Typically, annuities allow for a percentage withdrawal based on the account's value or a predetermined formula. It's advisable to consult the specific annuity contract or a financial advisor for precise figures, as penalties may apply for withdrawals before the specified age or outside of contract terms.
