Fixed Annuity Choices - Significant Considerations

When it comes to fixed annuity choices you have two basic types to select from - the immediate annuity and the deferred annuity.

If you opt to enroll in a plan that offers an immediate annuity, you will receive a check from the company anytime within twelve months of signing on the dotted line. An immediate annuity also offers you the choice of receiving the check every year for a specific pre-determined number of years or whether you just want to keep receiving the checks every year for the duration of your entire lifetime. In the latter case the insurance company will figure out how much each payment will be based on how much insurance you bought in the first place and the length of your projected life expectancy.

A deferred annuity is a little more complicated. It is a two-step type plan. During the first phase of the plan, known as the accumulation plan, your money is invested and allowed to grow in bulk. Taxes on this investment are deferred until you should choose to withdraw the money out, either as a series of payments or as one lump sum. The second phase of the plan is this payout phase

When it comes to fixed annuity choices many people opt for the deferred annuity because it offers more control over your money -especially over the dates when you can withdraw the money. The benefit of this is that you decide when to pay the taxes on income incurred from your fixed annuity.

When assessing your fixed annuity choices it is probably a good idea to assess whether or not you are going to need to withdraw the money before retirement. If you think you will need money before you retire then the deferred annuity is a better choice as it offers more flexibility in both what amounts you can take out and when you can withdraw the funds.

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