Though an annuity is often used interchangeably with an investment product, it is actually and insurance policy. But the operation of an annuity policy is similar to an investment product. Normally, the investor pays either a single premium or monthly premiums to the insurance company for an annuity product. The time period for such premiums can last for as long as 10-25 years. When the investor is ready, he/she receives monthly income payments from the insurance company from the annuity. Depending on the terms of the annuity contract, the payment from the insurance company may last for a specified period of time or for life.

As an alternative to monthly premium payments, annuities can be purchased with a lump sum payment. It is common for workers retiring with a 401K to purchase this kind of annuity. When they receive their retirement funds from their 401K, they use this to purchase a lump sum annuity. This way, the money received from the 401K continues to be tax deferred and is only taxed as it is received.

Though some think an annuity is only an investment for the rich, this is not the case. Annuities are a viable investment option for anyone saving for retirement. Many people have discretionary income, which is money not earmarked for bills and expenses, and ar placing this money into a savings account. These funds can just as easily be put towards an annuity.

It is very important that you find the best quotes when purchasing an annuity. You should do some comparison shopping by looking at many different insurance companies that provide annuity quotes. You could compare this to shopping around for the lowest rates and best coverage for your car insurance policy.

Different annuity providers will give you different annuity quotes. You would be given various options to choose from and you should choose the most suitable annuity as per your needs after studying the current state of the annuity market. There are a variety of options for annuities based on length of pay-in, length of pay-out, amounts paid in and out, and numerous other factors. Finding the right annuity quotes among different providers can be frustrating, confusing and quite time-consuming.

The good news is that, its not as difficult to find the best annuity as you might think. There are options available wherein you can research and obtain various annuity quotes from a variety of providers right in one place. Investors can now log onto many available annuity sites on the internet and research any amount of data they would ever want, related to any annuity. With so many tools around to help you find the right annuity, it would be quite unfortunate not to research annuities as you would any other investment.

- Ken Nuss

This entry was posted on Monday, December 14th, 2009 at 1:12 pm and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.