Annuities pay out differently according to the type of annuity you choose. The idea behind them is the same, but how an annuity pays depends on what you sign up for, and your chosen payment schedule.
How Often Will I Get Paid?
The scheduling of payments will depend on your preference or type of annuity. Many offer you the ability to choose to be paid once per month, quarter, six months, or year. Certain annuities offer the payment as a single lump-sum.
What Are The Types Of Annuities?
Annuities can be immediate or deferred. Immediate annuities are funded with a single premium and are paid out within a year – this is the Single Premium Immediate Annuity (SPIA).
Deferred annuities grow tax-free. Here, you pay premiums, and a portion of those premiums are allocated to your account for growth. Your investment grows according to whether you choose fixed or indexed. Either way, your account grows tax-deferred until you begin receiving payments. If you choose fixed annuities, your savings will gain interest. If you choose indexed, your account will gain interest and will be tied to a stock index, so you will also see capital gains.
What Are The Types Of Payouts?
Payouts can be:
- Life annuity with period certain
- Systematic annuity with withdrawal
- Early withdrawal
- Joint and survivor
How Does Each Type Of Payout Work?
Single-life pays throughout your lifetime. You won’t be able to choose a beneficiary to pass your annuity along to after you pass away like with the other choices.
Life annuity with period certain guarantees a minimum period of payouts – up to 20 years. If you pass away before the minimum period ends, a beneficiary may receive those payments for the remainder of that time after you pass away.
Lump-sum provides you with the entire annuity value at once. However, this has steeper tax implications than other options, which have smaller payments spread over the course of multiple years.
Systematic annuity with withdrawal is based on dividing the annuity value into smaller, evenly dispersed payments until the full value has been reached.
Early withdrawal means taking money from your annuity before you are 59 ½ years old. You will be charged a 10% penalty fee along with taxes.
For joint and survivor, the payments go toward you and one other person, typically a spouse. If you pass, the annuity goes toward the other individual.
Get Started On Your Annuity Today
At Secure Insurance Group, we want to make sure that you will have a financially stable and comfortable retirement. We provide annuities tailored to your personal goals and interests. Learn more by calling us today at 417-883-9300, or our toll-free line at 1-877-871-7328.