Top 5 Annuity Benefits
Benefit #1: You pay less in income taxes. With money in taxable alternatives, you pay income taxes on all earnings whether you leave them in or take the earnings out. With an annuity, you pay income taxes on your schedule, typically when you want to take money out.
Benefit #2: You can have more money with an annuity than with a taxable alternative. This is because earnings accumulate three ways inside an annuity. Earnings compound on principal, earning compound on earnings and earning compound on money you would otherwise pay in taxes.
Benefit #3: You have three ways to withdraw money. You can take 10% of the value out each year. You can surrender your annuity, from which there may be a surrender charge. The third is called annuitization. When you want monthly income, for whatever time period you desire, you annuitize the policy.
Benefit #4: You enjoy the tax advantages set up by the government for non-qualified annuities. You could say that the annuity picks up where your IRA left off. It is just like an IRA. Earnings accumulate without tax consequences and income taxes are paid when you choose to withdraw money. However, unlike your IRA, there is no limit to how much non-qualified dollars you can put into annuity.
Benefit #5: You choose how your earnings grow. You can receive an interest rate guarantee for one or more years or your earnings can be tied to an index like the S&P 500. The question is; When would your like to reduce paying income taxes on your earnings?