Single Premium Annuities
Single Premium Annuities
Single premium annuities are a form of annuity, which are established by making a single lump sum payment. This contract is set-up to guarantee an income for a set period of time. This contrasts with other types of annuities where contract owners make steady payments over an extended period of time to create an income for later.
To make sure things are truly simple a single premium is an easy concept to comprehend. It means you pay the insurance company one time and have a contract for life. You can either start receiving payments immediately or defer your income for a number of years in the future.
So obviously a single premium annuity will require a minimum investment. Fortunately, this amount is not onerous. $5,000 to $10,000 is the typical amount required depending on the insurance company. Other conditions may exist but the minimum required amounts are in the 5 to 10 thousand range.
If you elect to receive an income immediately, your first check will be in the mail usually within 30 days. On the other hand, if you elect to defer your income dollars out to a date in the future, your money will sit with the insurance company and gain interest for as long as it is on deposit.
To go a little further, some s.p.a.’s last for life, ending with the death of the policyholder and possibly paying a beneficiary. Others are set to last for a specific period of time, such as 20 years. Keep in mind the larger the premium paid to establish a single premium annuity, the larger the payouts will be. Letting it grow with interest is always a nice option.
Single premium annuities can be purchased at almost any age. These types of annuities can be a great investment option for someone who has just inherited money and wants to let it grow, maybe continue working for a few years. They provide great benefits for individuals who have reached the maturity date on a CD or retirement account. Maybe you have sold property or discovered a windfall of cash for another reason.
The downside to a single premium annuity, or any other kind of annuity, is that closing the policy early or taking more than the free withdrawal amount allows can carry stiff penalties. The contract may carry what is referred to as a surrender charge. A surrender charge is a penalty fee based on a percentage of the total funds in the annuity, and people will also be expected to pay taxes on the funds when they cash out an annuity.
People who can imagine a scenario where they may need to access the funds they would use to establish an annuity may want to consider another annuity investment instrument which will allow for more flexibility.
Annuities, whether single premium annuities or multi-premium, offer the advantage of providing an income stream for the life of the annuitant when utilized correctly. This means a person will not outlive their retirement funds. If one of the aforementioned situations sounds familiar consult a professional today and find out what your money can do for you. Find out about single premium annuities today. There’s an annuity for everyone find yours today.