The owner of KK&B Financial Services for Seniors, Brad Liebe provides financial consulting and estate planning services to clients through seminars and private consultations. Licensed in California, Wisconsin, and Florida, Brad Liebe also offers various financial and retirement products to clients, including annuities.
An insurance product, an annuity is a contract between an individual and an insurance company. Two main types of annuities are available to choose from: immediate and deferred. Both types can provide a continuous stream of payments, and both allow for unlimited contributions. However, they function in distinct ways.
With an immediate annuity, individuals pay their insurance company a large amount of cash upfront. This lump sum is immediately converted to an income stream, and the individuals start receiving monthly payments in one to 12 months. These payments stop when the individual who set up the annuity dies.
Deferred annuities, on the other hand, can be set up with either a lump sum or in several payment plans. Unlike immediate annuities, deferred annuities do not begin paying out shortly after being set up. Individuals defer payout to a future date.
Deferred annuities are best for people who have maxed out their contributions to tax-advantaged accounts, such as a 401(k). Heirs may also benefit from a deferred annuity since the plans pay a death benefit of the amount remaining.
An insurance product, an annuity is a contract between an individual and an insurance company. Two main types of annuities are available to choose from: immediate and deferred. Both types can provide a continuous stream of payments, and both allow for unlimited contributions. However, they function in distinct ways.
With an immediate annuity, individuals pay their insurance company a large amount of cash upfront. This lump sum is immediately converted to an income stream, and the individuals start receiving monthly payments in one to 12 months. These payments stop when the individual who set up the annuity dies.
Deferred annuities, on the other hand, can be set up with either a lump sum or in several payment plans. Unlike immediate annuities, deferred annuities do not begin paying out shortly after being set up. Individuals defer payout to a future date.
Deferred annuities are best for people who have maxed out their contributions to tax-advantaged accounts, such as a 401(k). Heirs may also benefit from a deferred annuity since the plans pay a death benefit of the amount remaining.
