Understand the Basics

grandparents on the beach with their grandkids laughing annuity basics

Understanding Annuity Basics

An annuity is an agreement with an insurance company that allows you to receive payments over a defined length of time. Compared to traditional options like employer-issued retirement accounts, an annuity can provide flexibility: for example, you may choose whether to receive payments monthly, quarterly, or annually.

A fixed-indexed annuity (FIA) protects your money even during a market drop. All the while, it still provides the opportunity to earn a reasonable rate of return.** Contact us if you need assistance in understanding annuity basics.

Fixed Indexed Annuity Basics

An FIA may offer more protection for your money, because the funds are not invested in the stock market. Instead, you contribute a predetermined amount, which the issuing insurance company puts away as a reserve. Details will vary based on your specific contract, but basically, you leave the money untouched for a specified amount of time while it accumulates indexed interest.

padlock laying on hundred dollar bills
senior couple having fun driving a convertible annuity basics

Learn More About

Annuity Basics and Taxes

Annuities gain interest tax-deferred.

You only pay taxes on the funds in your annuity when you make withdrawals. Additional tax benefits are also available. For example, suppose you’re under 59 1/2 years old, and you receive a lump-sum payment from a former employer’s 401(k). If this amount is part of your early retirement or severance package, you will be subject to significant taxes. However, if you “rollover” the money into an annuity instead, you may be able to postpone the impact of taxes. Of course, while dealing with such issues, you should always speak with a qualified tax advisor.

Do you want to understand more about annuities and how they work? Reach out to us. Schedule a meeting or reserve a seat at one of our no-cost educational seminar events. These events typically include a gourmet meal, also no-cost, and a discussion on a variety of topical issues, including a more in-depth look at how FIAs work.

Scroll to Top