A life annuity is a financial contract in the form of an insurance product according to which the issuer (typically a financial institution such as a life insurance company) makes a series of future payments to the annuitant in exchange for the immediate payment of a lump sum or a series of regular payments , prior to the onset of the annuity. South Pacific Insurance Agency located in Mililani will be able to help provide the Annuity Insurance specific for your needs.
Types of Annuities
Immediate Annuity vs. Deferred Annuity
Immediate Annuity is when your money provides guaranteed payments to you that begin soon after you make your initial payment. Depending on the tax-qualified or non-tax-qualified status of your annuity a portion or the entire payment can be included in your taxable income. The owner can elect to receive guaranteed payments for life or elect payments to be made over a specified length of time.
Deferred Annuity is when your income payments are usually put off for a period of time allowing the money you've invested to earn interest generally tax-deferred. You choose when you want to start receiving income payments — typically, upon retirement.
Acceleration of Payments
Acceleration of Payments is a provision which allows the remaining certain period income payments to be accelerated after the first policy year. If the unexpected happens (home repair, medical bills, or family emergency), it's nice to know you have options. Minimums apply and partial accelerations are limited to one per policy year.
Fixed Annuity vs. Variable Annuity
Fixed Annuity is money placed in fixed-rate investments, such as bonds, where it will earn a fixed interest rate for a certain period of time. For most fixed annuities a minimum interest rate is guaranteed.
Variable Annuity is when money is placed in market-based investments. This may include stocks, bonds, mutual funds, or money markets. You may have the option to move the money around among the different investments. In addition, the rate of return can vary based on the performance of the investments. With a Variable Annuity, the risk is taken by the annuitant, rather than by the insurance company.