how does annuity investing work?

Most annuities are written for the benefit of the survivors - your estate would disburse the left over funds, per the instructions of the will. However, care must be exercised as to this distribution of funds to heirs could cause a tax liability, by putting them in a higher tax bracket. Most Annuities go the the minor children to avoid taxes.

There are super risks for the two one in each and every of your innovations, extremely. C shares, or no-load mutual money, sound like a deal, however the as quickly as a year expenses tend to be very severe. in case you intend to maintain your money in mutual money for quite a few years, that is extra desirable to invest in A shares and pay the sales can charge up front. you will finally end up with extra money in the long-term. the only reason you're able to purchase an annuity could be for the demise income. it extremely is a severe water mark the place the annuity is paid to you on the optimal quantity it replaced into extremely worth for the year in basic terms before a demise of an proprietor. you are able to take earnings from an annuity, yet you're able to do a similar from a mutual fund account without paying the further quantity in each and every year annuity expenses. you do no longer see those expenses, yet they are there.

It depends on the kind of annuity you have and the terms of that annuity.

The "balance" could revert to the insurance company.

Or it could be paid out to a secondary beneficiary for a number of years (10 years is probably standard).

Or it may have a cash value (esp. if it has an explicit life insurance benefit) that is paid out to a beneficiary.

Etc.

Except for the basic, inexpensive fixed, immediate annuity, figuring out the details of how the contract is actually going to work and how much it is going to cost often makes them not worth the effort.

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