Provide A Solid Base To Your Future With Insurance

The annuity is a contract with an insurance company in which the applicant may opt to receive cash payments on tax-deferred retirement income or an ongoing basis. There are various types of annuities which include immediate annuities, tax-deferred annuities, split annuities, college gift annuities and charitable gift annuities. Each and every annuity provides different benefits and features that will help in personal situations of the investor. The investor may be young and looking to invest for the future or he/she may be close to retirement and opt for immediate revenue.

In such cases, the split annuity will surely be beneficial for the investors as it is really a combination of a single-premium deferred annuity and a single-premium immediate annuity. The investors receive the benefits of the immediate annuity in which the policy provides you a steady stream of cash that is consistent, safe, and guaranteed, regardless of the conditions of market. The payments from the insurance company may be based on either quarterly, semi-annually, or annually basis. The choice is completely dependent on the investors. The taxes make up only 18 percent, depending on your tax bracket, of this flow of money. Thus, the taxes on the continued payments are negligible.

An additional aspect of a split annuity is the tax advantage the investor receives, which is the tax-deferred annuity portion of the agreement. The investor will be able to earn a tax-deferred growth on his or her incomes. The preliminary interest rate of return will be set for a defined period, such as one year, three years or five years. However, after that period, a new time period is laid down.

One more benefit is that the original principal is restored after the initial time period in the contract, with proper configuration and planning. However, this benefit is only true for the immediate portion of the annuity and not for the deferred portion of the investment. This restoration allows the investors to start the process at prevailing interest rates. The investors are restricted to receive immediate benefits for a period of three years to twenty years. However, the funds in the deferred portion may be extracted, but there are limitations and the investors should check this with their insurance company for getting more details on it.

For instance, if you divide Rupees 100000 evenly into the split annuity in which half is tax deferred and the other half is received immediately, you reap larger gains than if you place the funds into a single investment option. If the Rupees 50000 is put into the immediate portion of the annuity at seven percent then the investor will be provided more than Rupees 6000 every year for 10 years, which of course is significantly higher than the principal amount. The process can be started over, if the other Rupees 50000 would be invested in the deferred portion of the annuity contract and grow back to the original Rupees100000.

An added advantage, which is common to all annuities, is the death assistance. In any case, if the primary policyholder passes on, his or her beneficiaries will continue to receive the rewards of the split annuity agreement.