Understanding Your Annuity

When you made the decision to purchase you annuity, you may have intended for it to be an important part of your retirement income and you needed a method, which enabled you to save money and taxes. Maybe you wanted to eliminate the possibility you might outlive your savings. So you basically entered into a contract with an insurance company. You may have given the insurance company the money in a lump sum or you may have made a series of payments. The insurance company in return was to make payments to you either immediately or starting on a specified date later on in the future. Usually annuities will give a tax-deferred increase of your earnings. The insurance company may have included a death benefit, which will pay your beneficiary a guaranteed minimum amount, which may be the total sum of the purchase amount.

Before you consider transferring or selling your annuity, there are several factors to take into consideration. One of them being the amount of taxes you will pay on the annuity when you sell it. Another is the type of annuity you purchased; will it be to your advantage or disadvantage to sell your annuity. You will also want to take into consideration the reason you are thinking about selling your annuity. Once you have made the decision to buy an annuity, you will find there are three major types of annuities to pick from, the fixed, variable, and equity-indexed annuity. In case you are unfamiliar, here are the different annuities described.