You’ve probably heard of annuities but maybe you’re wondering what it really is.  The answer is any continuing payment with a fixed total annual amount.

The contract is created when an individual pays a life insurance company a single premium that will end up being distributed back to them over time.

There are 2 possible phases for an annuity.  In one, the customer deposits and accumulates money into an account, and in the other customers receive payment for a set period of time.

Annuities usually offer tax deferred income growth and may include a death benefit for your beneficiary so they can continue to receive the payments even if you are no longer living.

There are generally 3 types of annuities.  These are indexed, fixed and variable.  We’ll go into each one in more detail in future articles.

Annuities are the asset allocation of choice for securing retirements in these uncertain economic times.

If you are considering an annuity make sure to research your options first to make an educated decision if this is the right investment for you.

Benefits to annuities are:

• Earnings are not taxed at regular income tax rate
• You can put away larger amounts of cash and defer taxes
• No annual contribution limit
• When you cash out you can take lump sum or monthly payments for set amount of time

When you cash out you have options of income for guaranteed period, income for life with guaranteed period or joint and survivor.

Think this through to decide if its right for you.

John M. Bulbrook is founder and CEO of Bulbrook/Drislane Brokerage, a national distributor of financial products headquartered in the Boston area.  For more than 30 years John has helped insurance agents, financial planners and brokers find the right insurance and annuity products to meet the client’s needs.  In the process, he has earned a reputation throughout the industry for his integrity, resourcefulness and hard work, all carried out in good humor.