Fixed Annuity or Lifetime Annuity? Which is the Right One for Me
Reader’s question:
I have been researching annuities and shopping around Tacoma, Washington WA. It seems that either a fixed annuity or a lifetime annuity is right for my purposes, as told by my agent, but would there be anythign else I need to know?
Emma
Tacoma, WA
There can be many important differences between fixed and lifetime annuities which you need to take into consideration. For starters, a fixed annuity generates income for a specified or fixed period of time and its payout is not connected to the owner’s age. The return is directly related to the contribution amount of the annuity investment with the defined length of time the payments continue. Usually, the annual interest rate of this type will be determined by the carrier.
On the other hand, a lifetime annuity can operate differently. An annuitant, or a person, is connected to the lifetime annuity. With lifetime annuity, income is generated for the duration of the annuitant’s life. There can be interesting variations to lifetime programs.
Carriers for this type offer modifications of these concepts and it will be best to consult a representative or agent in Tacoma, Washington WA who can further explain the deferred-tax benefits of the programs. In your case, I think you need to decide whether you seek income over a pre-determined period of time or whether you are looking for income the rest of your life. It pays off if you get to understand the full tax benefits of the annuities.