📣June is #AnnuityAwarenessMonth 🎉 Let’s begin by diving into what an annuity is…
🔍 What is an Annuity?
An annuity is a contract between you and a financial/insurance company. In exchange for a payment or series of payments the institution agrees to invest your funds and provide a steady stream of income over a specific period or for life.
🪜How does it work?
Purchase 💵 – Annuity contracts are bought via a single lump sum or a series of payments referred to as premiums.
Grow 📈 – Your principal amount can grow by contributions, investment returns, or interest. This depends on the type of annuity.
Payout 💸 – Annuities ensure a consistent cash flow, which can be particularly helpful during retirement or when you need financial stability. This reliable income stream can help support your lifestyle when you are no longer working.
📚Types of Annuities
1️⃣ Fixed Annuities – These offer principal protection with a guaranteed interest rate for a predetermined time, insuring stability and protection against market fluctuations.
2️⃣ Indexed Annuities – These annuities offer principal protection as well. The returns of this product are based on the performance of a specific market index. These provide the potential for growth while protecting against downside risks.
3️⃣ Variable Annuities – With variable annuities, there is also principal protection. Here you have the opportunity to invest in stocks, bonds, or mutual funds and the returns fluctuate based on market performance.
Remember, it’s always important to carefully evaluate your financial situation and consult with a financial professional to determine if an annuity is the right choice for you. Happy Annuity Awareness Month 🥳💰💼
