what is an annuity in layman’s terms?
Posted on July 31st, 2008 in Annuity Insurance
Scarlett asked:
I know they’re sold by insurance companys, but what are they?
Ok, a lot of you are leaving answers as if you’re talking to someone who already knows what you’re talking about. I’m stressing the LAYMAN’S TERMS big time. Explain it to me without using too much technical lingo. Thanks.
I know they’re sold by insurance companys, but what are they?
Ok, a lot of you are leaving answers as if you’re talking to someone who already knows what you’re talking about. I’m stressing the LAYMAN’S TERMS big time. Explain it to me without using too much technical lingo. Thanks.
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Tags: Layman, Technical Lingo
This post has 5 comments
August 2nd, 2008
kinda like if you sued a broke person. they would have to make payments. or winning the lottery. they would give you so much a month instead of the whole lump sum. or an annuitty
August 3rd, 2008
An annuity is a prepurchase of a contract which states that the principal will earn interest at a given rate for a specified number of years. At maturity, there is a preselected distribution method which the company which sold the contract will honor. In the interim if the original company sold to another, the other must abide by the original contract.
August 6th, 2008
a fixed annual payment.
it could be as simple as receiving $1,000 per year.
typically, annuities as commonly referred to are insurance products sold to conservative, often elderly investors who value/need the cash to cover their fixed living expenses, and get a decent return on their investment, but without taking too much risk.
but generically, an annuity can just be a way of referring to a fixed stream of payments.
August 7th, 2008
Others have told you what they are. May I suggest not buying one from a salesman or “financial advisor” or bank?
If an annuity does seem to fit your needs, you can save a lot of money in the long run by buying from a company such as Vanguard. They don’t levy sales charges and have very low fees.
August 9th, 2008
An annuity is “the promise to pay an income”. In effect you pass over to an insurance company a lump sum of capital and they agree to pay you an income, the annuity, in exchange for that capital. Most annuities are bought from pension fund monies, so your pension fund is passed over to the insurance company to “buy” the annuity.
Pension annuities are payable for your lifetime and can also be paid to your spouse after you die. The annuity rate (the rate of income your capital will provide) depends upon how long the annuity will be paid for so is based on how long you are expected to live and interest rate. Women live longer than men, therefore their annuity rates are lower as the insurance company has to pay income for a longer period of time.
If you are looking for a pension annuity you can shop around to get the best deal and the highest income.
Disclaimer:
The answers above are for guidance only and should not be acted upon without you receiving independent financial advice relevant to your circumstances. To find and IFA please call 0800 085 3250 or go to.
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