What are the Different Types of Annuity Benefits?

Luke Arthur

One of the biggest annuity benefits is that it provides steady income for the individual who purchases the contract. Another one of the big annuity benefits is that it provides tax advantages for retirement savers. This type of investment also provides you with a passive form of investment that does not require a great deal of oversight.

A regular source of income is perhaps the best annuity benefit available.
A regular source of income is perhaps the best annuity benefit available.

Perhaps the best of the annuity benefits is getting a regular source of income. An annuity is a contract between an insurance company and an individual. With this contract, the individual pays a certain amount of money to the insurance company over his or her working life. The contract can also be purchased with a lump sum of money.

Once the payments are completed, the individual can begin to receive monthly payments from the insurance company. The payment terms can be set up to last for the rest of the individual's life or for a certain amount of time. If the individual is married, the annuity contract can be set up to last as long as the lives of both spouses. This provides flexibility when it comes to deciding how the structure of the annuity payments should be set up.

Another one of the best annuity benefits is that annuities provide tax advantages for individuals who are saving for retirement. When an individual puts money into an annuity, a portion of the money will go into investments. When these investments bring in returns, the returns are allowed to grow in the account tax-free. The annuity owner does not have to pay taxes on the money until he or she starts to receive payments after retirement. As long as the individual waits until after the age of 59 1/2, the money is allowed to grow tax-free.

Another one of the most prominent annuity benefits is that they can provide a passive form of investment for individuals who want to save for retirement. With an annuity, an individual does not have to make any individual investment decisions. The individual can simply make regular payments to an insurance company throughout his or her working life. The money will be handled by trained, professional investment managers.

These investment managers will oversee the investment decisions and make sure that returns are maximized. The person who purchases the annuity contract can relax knowing that his or her money is taken care of. Once retirement comes, regular payments will be waiting.

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