There are a lot of choices to be made when you purchase an annuity. This can seem confusing, but when you know what the choices mean you'll be able to choose the best annuity for your particular situation.
Choices can include:
Premiums
Will you pay regular premiums, flexible payments that vary over the course of the year, or will you pay in a single payment? If you choose the single payment be sure to choose an amount you know you'll be able to afford in a lump sum.
Also, you'll need to decide whether or not your premiums will be taxed as income, or not subject to tax. There are specific tax benefits for choosing either option, so you'll want to speak with an accountant or tax specialist in selecting the option that best works for you.
Payments
Do you want immediate payments or deferred? Do you want them for life, or for a specific period of time? If you want your annuity to begin paying when you retire, you can select that date as your payment date.
If you choose an immediate payout annuity you'll need to make at least one payment and you'll begin receiving payments within one year of the purchase of your contract.
Also, if you want to receive payments for life, known as a life annuity, you'll need to work with an insurance agency, and decide whether or not you want to have a clause that includes a beneficiary.
There are many more decisions to be made when choosing the best annuity for you, so be sure to speak with your agent about all of the options available for today's annuity contracts.