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Reasons for Purchasing an Annuity

Reasons for Purchasing an Annuity

Annuities can serve many useful purposes.

If you are in a saving-money stage of life, a deferred annuity can:

  • Help you meet your retirement income goals. Employer-sponsored plans such as a 401(k), 403(b) or Keogh are an important part of planning for retirement. However, contributions to these plans and to IRAs are limited, and they might not add up to enough for the retirement income you need, especially if you started saving for retirement late or had contributions interrupted—perhaps due to job changes and/or family responsibilities. Moreover, your social security and defined-benefit pension (if you have one) may provide less than you need to retire. Remember that the purchasing power of defined-benefit pension income is eroded by inflation.
  • Help you diversify your investment portfolio. Investment experts routinely advise that, to get the best return for a given level of risk, you should diversify your investments among a number of asset classes. Fixed annuities, in particular, offer a unique asset class—an investment that is guaranteed not to decrease and that will actually increase at a specified interest rate (and, often, potentially more). The guarantees are supported by the claims-paying ability of the insurer.

If you are in a need-income stage of life, an immediate annuity can:

  • Help protect you against outliving your assets. Social security pays retirement income for as long as you live, as do defined-benefit pension plans. But the only other source of income available that continues indefinitely is an immediate annuity.
  • Help protect your assets from creditors. Generally the most that creditors can access is the payments from an immediate annuity as they’re made, since the money you gave the insurance company now belongs to the company. Some state statutes and court decisions also protect some or all of the payments from those annuities.

Fox Insurance Agency

At Fox Insurance Agency, we proudly serve Beaverton, Portland, and all of Oregon, Washington, California, Arizona, Texas, and Nevada. Whatever your needs, we would be happy to help you find just the right policy to meet them. As an independent agency, we are able to provide quotes from more than one insurance company. We work only with highly recognizable, reputable insurers.

If you are interested in an annuity quote, policy, or more information contact us today. We would be happy to help you find the right policy for your situation.

The information in this article was obtained from various sources and is not all inclusive regarding the subject matter. This content is offered for educational purposes only and does not represent contractual agreements, nor is it intended to replace manuals or instructions provided by the manufacturer or the advice of a qualified professional. The definitions, terms and coverage in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied. Content provided by Insurance Information Institute.