Advantages of the Variable Annuity

The variable annuity is a type of investment that is often utilized for retirement planning. Many people do not realize what is involved with this type of investment. Here are a few of the advantages that you can gain by investing in a variable annuity.

Periodic Payments

The primary objective when investing in a variable annuity is the creation of regular payments once you retire. With a variable annuity, you will essentially be able to create a monthly paycheck for you and your spouse. You will be making payments to the insurance company while you are still working. Then, whenever you reach a certain age, you can start taking monthly payments from the money that you have accumulated in the annuity. This is a great way to ensure that you have enough money to retire. Many people like the idea of still getting a regular paycheck even after they have retired from their careers. A variable annuity is one of the best ways to accomplish this.

Death Benefit

Another advantage that you will receive by investing in a variable annuity is a death benefit. If you die, your family will not necessarily lose all of the money that you have paid into the variable annuity. Instead, they will most likely be able to receive a good portion of the money that was paid in. Your family might be able to take over your annuity payments for a certain period of time. They also might be able to get a lump sum payment from the annuity provider instead. Each variable annuity will have differences in the way that the death benefit is provided. However, you should feel comfortable that your beneficiaries will be able to receive something if you were to die before receiving your annuity benefits.

Tax-Deferred Savings

Another big advantage that you get by investing in a variable annuity is tax-deferred savings. You will be putting money away into this variable annuity while you are still working. The money that you put into the annuity can be invested into a number of different investments. Traditionally, if you earn money from investing, you will have to pay taxes on this amount. However, when you put money into a variable annuity, the earnings from your investments will not be taxable when you earn them. You will not start paying taxes on the money that you earn until you retire and start taking periodic payments from the annuity. This allows you to compound your earnings and grow your portfolio more rapidly.

Fitting into Your Plan

Another good thing about variable annuities is that you can add them to your pre-existing retirement plan without much problem. Even if you invest in a qualified retirement plan, you will most likely have to put some of your money into a variable annuity. If you are investing in some other type of retirement, you can simply devote a portion of your retirement savings to the purchase of a variable annuity.

blog comments powered by Disqus