These days, even though there is no dearth of the types and variations linked to fixed annuity products, there’s a common streak that runs through each of them. Regardless of the type and nature of the annuity products shortlisted, users can look forward to getting undeniable benefits from them all. Each of these variations is designed for offering slightly different performance metrics or safety benefits to investors. In other words, the different aspects of such contracts are worthy of further exploration.
Annuity Payout Benefits
According to Payment and Performance Bond experts, several shortcomings and complexities are known to dissipate when Single Premium Deferred Annuities are “annuitized”. In other words, funds are put into use for commencing monthly payments to the annuitants that are guaranteed for life. In most cases, these accumulated payments are on a monthly basis, but they can even be paid out on a quarterly or annual basis.
There are different ways in which the overall annuitization process can be possibly arranged, either on the basis of lifelong guaranteed cash payment amounts, and/or with the aid of guaranteed payments (with the period being certain) made to named surviving beneficiaries after the death of the annuity holder. These annuitized payments offer returns of principal along with interest, therefore enabling the annuitized payments to become larger in amount than standard interest withdrawals. Also, they become partially tax-free because of the return of principal. As the manner of selecting the payment stream happens to be a relatively complex affair, it is a good idea to seek professional advice for going about the act.
Most Single Premium Deferred Fixed Annuities are evidenced with respect to their performance history. As they are in the bracket of above average investment alternatives, they may consistently outperform all other alternatives to give off better returns. It is important to note that the past performance may not serve to be the right indicator of future results. It is seen that the performance of annuities tends to be more compelling in case their abilities to defer all income taxation is taken into consideration.
The Deferred Annuities that are purchased on the basis of fixed rates do not fluctuate; in fact, they are often guaranteed to not lose value. These deferred annuities show a consistent and regular increase in value, courtesy the processes of interest crediting. Just as other insurance products, these annuities also have the additional benefits of being shielded from probate.