Annuity Premiums Characteristics: Rate, Length of Time, Distribution

There are several factors that contribute to the annuity return of payment:
1. Rate of return gained by the fund
2. Distribution procedure of funds to beneficiaries (can raise or lower your monthly annuity return)

An annuity can be purchased by a lump sum or single premium annual bonus. An SPDA is a basic annuity that works by buying a contract and pay a lump sum at the front, then you will be given a guaranteed future payments. If you die before starting to withdraw the money, the policy then pay the property will pay the contract amount plus interest.

Annuity income depends upon life expectancy and is therefore classified as life insurance. You must understand this, because the classification allows lower damages for deferred taxes, other than raising taxes will be processed until the money is withdrawn important. This is odd, given that over 95 percent of the pension, investment, and only a very small compensation insurance.

But beware if you withdraw before age 59 1 / 2 except in certain cases, a premature withdrawal will cost you a penalty of 10 percent IRS. In the eighth year on, you won’t bear a penalty. Look for the number yourself before you invest, and compare the prices of several companies.

Securities and Exchange Commission need annuity companies to show charges in similar standardized table located near the beginning of booklet (like prospectus). There are several charges incurs:

• Annual maintenance costs
• Annual mortality and expense charges
• Front-end sales commissions
• Surrender charges
• Annual investment advisory fees