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learn annuity for beginners in 2 minutes

Hi,

Professor Savings here.

Today’s topic is what is an annuity?

well…

It an type of insurance financial product pays an income structured to pay you a

steady amount over a period of time.

It’s a popular choice for retirement arena this is how it works annuity is a

contract between you and a financial institution.

Two options.

a) Schedule to make a payment in the month

  or

b) provide a lump sum

This money is in the hands of a financial institution more than likely an insurance company.

Then income will be distributed to you monthly, quarterly, annually, or lump sum.

These are called distributions. Lets understand more

The insurance company in turn will use the money you contributed and invest it .

When distribution hits the payments are allocated to you.

Wow dont forget you still have to pay for the taxes on the income earned from distribution.

Two major point on the annuity . The contract will state the payment intervals and the age that the payments will start.

I’m here to bring you just the basics but there are various types of annuities such as deferred, immediate, fixed, and variable.

So consult a financial advisor for more details

If you would like to learn more about finance basic subscribe to our channel now

Professor Savings Signing off!

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