| Insured investments are an important part of any | | | | Another use of annuities is after the roll over or |
| financial plan. An annuity is one such aspect. | | | | distribution of a retirement plan. The lump sum can be |
| An annuity is a legal contract whereby one party pays | | | | used to purchase an annuity that continues to pay a |
| in a lump sum of money to another and receives | | | | set amount of money on a monthly or yearly basis for |
| regular payments in return over an extended period of | | | | the remainder of the owner's lifetime. In some cases, |
| time. There are several various types of annuities, but | | | | the payouts can continue after death to a designated |
| the basic idea remains the same. Annuities are a | | | | beneficiary. |
| deferred investment contract. They are a financial | | | | An annuity can also be used as an investment tool for |
| instrument that is sold by the same companies that sell | | | | retirement planning. The Internal Revenue Service limits |
| life insurance policies. | | | | the amount of money that can be put into tax |
| In some ways, the annuity is like a life insurance policy | | | | deferred retirement plans like a Roth IRA. If a person |
| in that the risks and uncertainties are transferred from | | | | has extra cash or income and is seeking a long term |
| the insured to the insurer. The insurer reduces his own | | | | investment beyond the limits of his retirement plans, the |
| risks by pooling a large number of annuities. One of the | | | | purchase of an annuity can be a very attractive option. |
| common examples of an annuity is the deferred | | | | Knowledge of the types of annuities and how they |
| payments after winning a lottery. The lottery winnings | | | | can be used in formulating a successful personal |
| can be paid out in a lump sum or spread over a | | | | financial plan can be a valuable asset in making long |
| number of years with equal guaranteed payments. | | | | term financial game plans. |
| The equal payments are in the form of an annuity. | | | | |