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A retirement annuity can be a practical addition to your investment portfolio, as it can lower risk for older investors while adding to the guaranteed income they need as retirees. Before you decide to buy this type of product from a reputable insurance company like Puritan Financial Group, there are some things you need to know, such as how a retirement annuity works and the different kinds of annuities available today.

Annuities - How Does it Work?

{Annuities will begin to generate income as soon as you put in your initial investment or the first investment in consecutive payments. You can receive a lump-sum payout on a set date, or you can opt for a set of payouts on a series of dates. Other than the lump-sum payout option, you can also opt to get your annuity payouts on a monthly, quarterly or annual basis. Payouts can also be set to be received over the years as you live, or you can set it for every number of years. The amount of money that you can possibly receive will be dependent on different factors such as the total of your investments in the annuity, your payment duration, as well as the performance of the assets where your annuity payments were invested (applicable only for variable annuity). }

Immediate Annuities and Deferred Annuities

Deferred annuities invest your money for a pre-determined period. Upon the end of your payments and the maturity of your annuity, you can start to take distributions from it (ideally, in retirement). For immediate annuities, payouts to the investor can begin right after one payment.

There are also fixed or variable immediate and deferred annuities. A fixed annuity will come up with a fixed set and amount of payouts to the investor, while an immediate annuity will base the payouts on the performance of the assets where the investment was made.

Knowing and being able to differentiate one type of annuity from the other can help you determine which type of annuity will best suit your needs. Remember that there are a lot of dishonest sales agents out there who may persuade you with insurance products you don’t need. To be sure, do your own research and only purchase from a reputable and stable company. You can start by considering companies like Puritan Financial Group.