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What Are Annuities?

An annuity is a contract between you and an insurance company that requires the insurer to make payments to you, either immediately or in the future. You buy an annuity by making either a single payment or a series of payments. Similarly, your payout may come either as one lump-sum payment or as a series of payments over time.

Annuities image with a growing plant and stack of increasing money

Why Do People Buy Annuities?

People typically buy annuities to help manage their income in retirement. Annuities provide three things:

What Kinds Of Annuities Are There?

There are three basic types of annuities, fixed, variable and indexed. Here is how they work:

Variable Annuities

At Monocot Wealth Management, we believe that variable annuities can be a valuable component of an investor’s portfolio.

A variable annuity lets you choose how your money will be invested. The returns will vary depending on the performance of the investments you choose. This is the “variable” part of a variable annuity.

Similar to other annuities, earnings on your investments grow tax-deferred until they are withdrawn.

Because you’re invested in the market, there are risks involved—the value of your funds will fluctuate based on market performance. It’s possible that your investments could lose money.

However, insurance companies offer safety nets in the form of guarantees to mitigate those risks.

Understanding Fees in Variable Annuities

You will pay several charges when you invest in a variable annuity. Be sure you understand all charges before you invest. Besides surrender charges, there are a number of other charges, including:

    Read our complementary brochure: 7 Benefits of Variable Annuities
    Please contact us for more information and to receive our complementary brochure "7 Benefits of Variable Annuities".