When and investors enters into an annuity contract they are agreeing to supply the issuer with a lump sum and in return the issuer guarantees to payout premiums to the holder for a set period of time from the annuity investment. . An annuity investment does not qualify to be an insurance policy, however, they are distributed by insurance companies. An annuity is secure in that it is backed by the financial strength of the insurance company that structures the investment Annuities are advantageous for those looking for a relatively low-risk investment with a decent rate of capital appreciation. They allow an investor to enjoy the benefits of capital appreciation without being burden with the immediate tax implications. Tax is compounded and deferred until withdrawals are made. This allows your investment to grow in a tax-sheltered plan. Because they can defer taxes until annual payments are received they are popular investment choices for investors in retirement.
