Why Buy Annuities?
May 2, 2012 - Buying annuities can seem overwhelming at first. There seem to be so many options and bewildering terminology that you think you won’t ever get through it.
Relax. With a few simple questions to keep in mind and some guidance from your ERIE Agent, you’ll be able to select the annuity that fits you and your lifestyle.
Before you purchase an annuity, ask these four questions:
- When do I want to begin receiving payments? If you’re using an annuity as a long-term investment strategy, you’ll probably want to consider a deferred annuity. These annuities let you invest unlimited funds on a tax-deferred basis over time, but can take years before they’re ready to pay out. If, for instance, you’re already retired and want to begin receiving payments right away, consider an immediate annuity, which can begin paying out in just one month.*
- How long do I want to receive payments? Some annuities pay lump sums, while others pay monthly allotments for a given period of time, and still others continue to pay you for as long as you live. What makes the most sense for your lifestyle?
- Do I want growth or stability? If you want a stable, low-risk investment, consider a fixed annuity, which pays a fixed rate of income on the money you set aside.
- What happens to the annuity when I die? Depending on the type of annuity you purchase, several things may happen. Your heirs may receive a lump sum for the remainder of the annuity, they may continue receiving regular payments or all payments could cease upon your death. Make sure you understand the estate planning implications of the annuity you choose.
Still confused? Don’t worry, we can help. Contact a local ERIE Agent today. Your Agent will explain how annuities work and how they can fit into your overall investment strategy.
* Surrender charges and other penalties may apply to early withdrawal of principal. See policy for details, or contact your local ERIE Agent. Erie Family Life insurance products are not available in New York.