Everything You Should Know About Annuity Settlement Companies

It’s impossible to reach your retirement age without anyone asking you about annuities. People want to know whether you bought one or work for an insurance agency, or they are likely to try to sell annuities to you for a lifetime income. In such cases, structured settlement companies come to your rescue. 

Before that, it’s crucial to know what annuities are? These are insurance policies that are more like investments. 

Annuities offer a hedge against the risk of losing your income. For instance – a huge loss in the stock market or when your shares collapse in the market. So, instead of personally managing your money in the form of stocks and mutual funds, it’s better to buy an annuity that guarantees you a steady income for a lifetime. Such an act is possible with the help of annuity settlement companies

To be precise, annuities are contracts between insurers and investors. Under this process, you can invest money through a series of payments or a lump sum. In addition, the insurer agrees to make periodic payments to the investors in the exchange of investment. Just like a life insurance policy that guarantees a lump-sum payment to your heirs, an annuity contract with an annuity settlement company will be beneficial as they will pay you.

History of Annuities 

It dates back to ancient Rome, but the record of the first annuities was in America during the colonial period. Then, in 1759, an organization was formed to provide a secure retirement for ageing ministers and their families. The era of annuity began in 1952 for the educator’s retirement fund. Today, annuities are used to provide a good plan for individual retirement, i.e. on a tax-deferred basis. 

Structured Settlements and Annuities 

Structured settlements are linked to annuities because they effectively deliver income to the people who need it. The idea behind this process is to replace lump-sum payments awarded to personal injury claimants within the month’s time. Annuities are designed to offer timed payouts, investment gains, guarantees on the principle that the insurance organizations were already offering. As a result, it quickly became a preferred option for implementing structured settlements. And, to encourage this, new laws were made on capital gains and interest on the annuity for structured settlement tax-free. 

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Pros and Cons of Annuities 

The primary reason for owning annuities is security. To ensure a continued stream of income during retirement, various annuities are guaranteed a minimum rate of return. It means not only will the principal be protected against the risk of loss, but the income will be pretty good. Thus, the owner of an annuity receives a life-long stream of income that’s more than the original investment. 

The best part is that annuities offer predictability. Fixed annuities are tied to investors who are curious about income generation in the future. They generally provide superior rates to money market accounts or CDs, i.e. certificates of deposits. Plus, they come with built-in protections and guarantees. 

Whereas variable annuities are tied to unwavering interest rates. These are attractive to the investors who know how much money will be generated in the coming years. In addition, it offers great flexibility, protection against losses and certain tax benefits. 

The other part of the story is that annuities come with very high fees. For example, a broker who sells an annuity plan to you receives a commission, and the annuity settlement organizations take annuity charges as per the annuity maintenance fees. 

So, what are you waiting for? Get in touch with the companies that buy structured settlements and make the right move!