What is an annuity? Depending on your interests, your present work, or previous employment, you may know all the options and ins-and-outs of annuities. Or, if you are like most, you may have never heard of an annuity. Annuity, explained in it’s most basic understanding, is an investment and usually an investment for one’s retirement. An annuity can be a powerful tool and can be a means to reap huge future benefits. When you buy an annuity, you will pay an insurance company a lump sum or a series of payments that they will then, in turn, pay you at a specified date.

What is an Annuity?

What does an annuity do for you? An annuity can be a source of income during retirement, provide investment opportunities and asset growth, be a death benefit, and can be a means of affording long-term care.

Should You Buy an Annuity?

The first thing you need to ask yourself when you are considering buying an annuity is, what do you need an annuity for? Do you need it for income during retirement, for financial growth opportunities, for your beneficiaries, or to pay for possible expenses during retirement, such as long-term care. When you determine what you may need an annuity for, next, you must look at which annuity option would solve your financial problem or best meet your financial goal. In addition, you must also think about how much money is required to reach your goal and if, at the moment, you are able to allocate funds for the investment of an annuity.

It can be overwhelming when considering such a large and long-term financial opportunity. That is why we at Naples Life Insurance and Annuity Advisors are here for you. We have the experience and the attention on the current market to help you make a wise financial decision that will have great opportunity to benefit you. We’d love to help you see the possibilities that you have and help you find present and future prosperity.



Annuity Basics You Must Know

Though our advisors are here to help you, here are some basics to know when looking into annuities and what they can do for you. There are several basic types of annuities. The first way in which to understand and describe an annuity is by the amount of time that passes before you get your first payment. An annuity can either be immediate or deferred.


When you buy an immediate annuity, you begin to receive payments as soon as you have paid the initial payment. Many who are nearing retirement age choose an immediate annuity because they will need to begin receiving payments soon.


A deferred annuity is one in which you begin to receive payments at a later date. Instead of beginning to receive your payments after the initial payment has been made, you will be paid at an agreed upon date. In some cases, a deferred annuity can become an immediate annuity.


An annuity is also described by whether it is fixed or is affected by a variable. A fixed annuity means that the principal amount is set to a fixed amount, meaning that you will receive the same amount of income every year. The amount will not be affected by a variable such as interest rates, market fluctuations, and other financial influencers. A fixed annuity is a great option for those who wish to invest, but tend to have a more conservative approach to investment.


As you probably assumed, a variable annuity is one that is affected by the financial market, a group of investments, or by other decided upon factors. A variable annuity is best for those who like to make more risky investments. Sometimes pre-retirees and those who are already retired will choose a variable annuity for the chance of capital appreciation.

Other Types of Annuities

When you are looking to invest in an annuity, you will notice that you have many options, giving you the opportunity to choose one that will fit your needs well. Here are some of the other types of annuities that are available:

  • Equity-indexed annuity – a hybrid of sorts which has a minimum interest rate, but its value is based on a specific stock index
  • Market-value adjusted annuity – with this type of annuity, you can set a time period in which you will annuity will grow, but can withdraw money at any time.
  • Lifetime annuity – ensures that you will receive payments for the rest of your life and the life of the second person on your annuity.
  • Qualified – you will choose this one if you wish to invest and disburse money in response to a tax-favored retirement plan
  • Non-qualified – this plan is not affected by a retirement plan.
  • Single Premium –  this annuity is accumulated by a single payment
  • Flexible premium – this kind of annuity is funded by a series of payments and is always a deferred annuity.

Naples Life Insurance and Annuity Advisors

This covers the very basics about annuities. We at Naples Life Insurance and Annuity Advisors would love to help you find the best investment for you and your future! Contact us today!

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