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Annuity – Florida Annuity and Insurance Fraud Litigation Attorney
This post is designed to provide a general definition of the word annuity. It is being provided for general educational purposes only. Thus, it is not designed to be complete in all material respects. If the reader has any questions concerning the contents of this post, he or she should consult a qualified professional.
An annuity is a form of contract sold by life insurance companies that guarantees a fixed or variable payment to the annuitant at some future time, usually retirement. In a fixed annuity, the amount will be paid out in regular or a lump sum payment, with the former varying only with the payout method selected. In a variable annuity, the payout is based on a guaranteed number of units; unit values and payments depend on the value of the underlying investments. Currently, all capital in the annuity grows on a tax-deferred basis.
Key considerations when buying an annuity are the financial soundness of the insurance company, the returns it has paid in the past, and the level of fees and commissions paid to the salesmen. A separate, highly important issue that should always be reviewed when considering the purchase of an annuity, is the surrender change one must pay if the policy is terminated before it maturity. The surrender charge varies, by among other things, the insurance company, whether or not any bonus payments have been made, and what other unique benefits may be associated with the contract.
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