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About Your Annuity - Types Of Annuities And Their BenefitsThe term 'Annuity' refers to a contract between an insurance company and an individual. Types Of Annuities An annuity can be classified into two categories as immediate or deferred annuity. In an immediate annuity, the payment starts immediately and it is up to the purchaser to choose if the annuity is for a lifetime or just a specific number of years. If you opt for a deferred annuity, your payment is deferred, usually until retirement, allowing the money to grow because it is tax-deferred; it can be withdrawn as a lump sum or in installments at a later date. Fixed annuities are for those who prefer completely secure and guaranteed investments. The insurance company guarantees to repay the principal amount invested plus a certain percentage of interest to the purchaser. Fixed annuity is of two kinds, equity-indexed annuity and market-value-adjusted annuity. If you opt for an equity-indexed annuity, a minimum rate of interest is paid but its value is based on the performance of a specific stock index. A market-value-adjusted annuity allows you to determine the interest rate and the time period plus the added benefit of being able to withdraw money from the annuity before the end of its tenure. In the case of a variable annuity, the money is invested in a fund much like a mutual fund. The principal amount and the amount to be paid to you depends on the performance of the fund, thus are variable. You can opt for a fixed period or a lifetime annuity or go for a single premium or a flexible premium annuity. Thus, if you need secure investments, opt for an annuity offered by a qualified legal reserve life insurance company. Investing in an annuity is perfect for estate planning: Your money is tax-deferred to a certain extent, there are no limiting restrictions, and payments are easy and flexible.
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