Fixed Interest Rate Annuities The company that issues the annuity sets the current rate of interest it will pay on its contract with you and revises it periodically. Rates may be adjusted monthly, annually, or less frequently. When the rate changes,
it sometimes increases and sometimes decreases, reflecting what’s happening in the economy at large. But it can never go below he guaranteed rate, the state-mandated minimum that’s set when you buy the annuity. Guaranteed Lifetime Income Annuities You can set up your immediate annuity to pay out income monthly, quarterly, semi- annually, or annually. That can be a big advantage over other income-producing investments such as bonds, which typically pay on a fixed, semi-annual schedule. And remember that immediate annuities provide an additional benefit, since part of each income payment is return of principal on which you owe no tax. One criticism sometimes leveled at income annuities is that you lose control over your assets. However, some immediate annuities let you commute your contract, which means you can accelerate your payments, or take some or all of the cash value minus expenses in a lump sum at any point. Indexed Annuities By protecting your principal against
market downturns, the issuer of   Read more…