What is an Annuity?


Posted on 23rd February 2012 by Rita in 401k |Annuities |Retirement and Estate Planning

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An annuity is a type of insurance product that can provide income you cannot outlive. Generally used as part of a retirement strategy, annuities are able to provide a steady stream of income, making it a popular choice among investors.

Here’s how an annuity works: Make an investment into an annuity and in-turn you receive money from your annuity over a period of years or for life. The money you receive from your annuity can be distributed monthly, quarterly, annually or in one lump sum payment. The size of your payments received from the annuity are determined on a number of factors such as: amount of your original investment, premium paid, age, payout period selected etc.

Remember no one financial product is right for everyone, diversification is key in planning… keep in mind a Flexible Annuity offers many advantages for your “Safe Money”.

Annuities – one of the few financial vehicles that guarantees you can not outlive your income.

Annuities can be intricate products and hard to understand, for that reason it is always best to seek guidance from a professional. But their fundamental purpose can be easily summarized:

Designed to accumulate funds on a tax-deferred basis for the long-term.


Designed to provide a source of income, guaranteed payable for life or for an per-established period of time.

At retirement, or when changing places of employment, you have options:

401(k) Transition Options

Keep money in your current retirement plan. -Unsafe

Transfer current (401k) plan to new 401(k) plan with new employer. -Restrictive

Cash out your 401(k) -Costly (because you will be taxed on all this money)

Rollover – Move money to a qualified retirement account. (Such as an IRA – individual retirement account).

(For added information about the above options read blog post: Starting a new job? Leaving an old job? Have you contributed to a 401k plan? )

Note: Poor investment management with your IRA(s), may mean you will outlive your money in your retirement years.


North Coast Life Annuity Benefits include:

Competitive interest rates

Lowered investment risk

Lifelong monthly income.

Both IRA’s and Annuities offer tax deferral of your earnings. IRA annuity contributions are tax-deferred until withdrawal. Non-IRA contributions are not tax-deferred, but reduce the amount that is taxed at the time of distribution.

Financial Goals Met –Annuities are designed to meet your financial goals with Tax-Deferred Growth and Competitive results. North Coast Life Annuity Products guarantee the safety of your paid-in deposits and guarantee your money will grow.

Tax-Deferred Advantage –Tax-deferred interest means income tax on earnings will be deferred until payout of the proceeds. In-turn this means your cash grows faster since you pay no taxes on interest earned as it accumulates.

Your principal earns interest

Your interest earns interest

Your money you would have paid in taxes earns interest.

Probate Avoided –Probate is the legal process of supervising the estate of a deceased person. Resolving claims, debts, taxes and distributing the deceased persons property.

With an Annuity – In the event of death, funds are paid directly to your beneficiary and are not subject to probate. Thus publicity, delays, and costs are avoided. And your beneficiary will have the right to choose an appropriate income option.


Note: This blog is designed for general information purposes only. All information presented on this site should not be interpreted as legal advice and the author assumes no responsibility or liability for the actions taken or not taken by the readers based upon such information. For legal and tax advice contact your attorney or tax adviser.

Rita Sollie, Direct Insurance Representative with North Coast Life Insurance Company (NCL). No gimmicks or schemes here, just genuine and honest service. We don’t sell insurance, we solve problems. I welcome the opportunity to show you what NCL can do for your Life Insurance and Financial needs.
View INSTANT Term-Life Quote: www.insureyourfamily.com
If you prefer to speak with a local financial representative, call or email your request and you will be connected with a representative in your area.
Contact info: Phone: 800.541.5858 Email: rita.sollie@nclife.com or Live Chat below.

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