123ArticleOnline Logo
Welcome to 123ArticleOnline.com!
ALL >> Investing---Finance >> View Article

Investment Annuity Cashout Options

Profile Picture
By Author: Ivan Cuxeva Jr
Total Articles: 782
Comment this article
Facebook ShareTwitter ShareGoogle+ ShareTwitter Share

Annuities and Certificate of Deposits are financial investment instruments which have very similar features. Annuities normally require an up-front payment which will be used to provide a series of deferred payments in the future.

The way annuities work is also similar to structured payments up to a certain degree. As previously mentioned with annuities an investor provides an up-front payment to a financial institution, then these funds are assigned a fixed or variable growth rate, up until this point is very similar to CD accounts but the financial instrument in question is tax-deferred during the accrual period, meaning that taxes on the earnings will be charged at a later time after the earnings have been realized. Financial institutions or insurance companies agree to pay periodically for the rest of the client's life. As you can now see this last phase is very similar to the way structured settlements work and just like the later mentioned, a beneficiary can be assigned on the account in case of death.

Annuities are classified into Immediate Annuity and Deferred Annuity. The first one (Immediate) provide ...
... a series of increasing payments until the client dies, this is also known as a pension. Deferred Annuities are classified in Fixed and Variable. Through the fixed type a guaranteed rate is delivered and through the variable type the funds are deposited in separate accounts, the amounts may vary.

Through this payment scheme the client is receiving a determined amount of money every month, or however the payment agreement has been arranged. The main disadvantage this financial instrument has is that it is not liquid meaning that if the person decides to withdraw the funds before he reaches a certain age a penalty is charge, just like traditional retirement accounts.

If something happens throughout the life of the client and he/she needs to use the funds immediately, there will be several procedures to go through before the funds are received, and most of the time this means that the full value is the instrument is not received because of penalties and taxes

As you now realize, there are several downsides to annuity accounts. A good cash out option is to turn this monetary instrument into a lump sum instead of getting small periodical payments. Through a lump sum the funds are available immediately and can still earn interest on liquid certificate of deposit accounts or through any other liquid interest bearing account.

Total Views: 340Word Count: 398See All articles From Author

Add Comment

Investing / Finance Articles

1. Chart Patterns For Effective Intraday
Author: strike

2. Analysis Of Bank Statements: Essential For Banks And Nbfcs
Author: Aakash Parikh

3. Essential Tips For Buying Crypto Miners: Make Informed Decisions
Author: blockdag

4. Everything You Need To Know About Applying For A Swift Funds Loan
Author: Sofia Alice

5. Finding The Right Mortgage Broker In Abbotsford And Surrey, Bc
Author: Satbir Bhullar Mortgages

6. Jaydeep La Residency Thane Kolshet Road Project 2 & 3 Bhk Flats
Author: akhilagardas

7. Embracing Sustainable Investment With Esg Data & Solutions
Author: By Inrate Team

8. The Importance Of Lead Qualification In Solar Appointment Generation
Author: Shan Tait

9. Setting Up Your Company In Ireland: Key Considerations For Successful Formation
Author: LSC and Partners - Corporate Tax Consultancy LSC

10. Mortgage Lenders edmonton – How Are They Going To Help You
Author: Dominion Lending Centres Ratefair

11. Why Managing An Smsf In Perth Can Maximize Your Retirement Potential?
Author: Daniel Stewart

12. The Future Of Cryptocurrencies: A Look Ahead
Author: Ethan

13. Unlocking The Power Of Biodiversity In Data Solutions & Rating Services
Author: By Inrate Team

14. The Role Of Chartered Tax Advisors: Ensuring Compliance And Maximizing Benefits
Author: Business Tax & Money House

15. Innovative Accounting Solutions For Modern Businesses
Author: Business Tax & Money House

Login To Account
Login Email:
Password:
Forgot Password?
New User?
Sign Up Newsletter
Email Address: