An annuity investment does not qualify to be an insurance policy, however, they are distributed by financial planners from insurance companies. An annuity is a tax deferred savings account issued by a financial advisor at an insurance company.
In this, the principal return is tax-deferred, and you will only pay taxes upon withdrawal of funds So as your saving – you pay no taxes! The result over the long-term is more cash available to earn interest.
There are fees associated with the purchase of an annuity. These vary depending on the type of annuity you purchase and may include these charges: administration fee, contract fee, mortality and expense risk fee, and a withdrawal fee
There are two ways to accumulate annuity growth.
1. Fixed Rate – a fixed rate of return.
2. Variable Rate – growth potential of investing in the stock and bond market.