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Everyone wants financial security, especially as they get to retirement age. Of course, traditional pension, retirement accounts and investment plans are all great investment vehicles to use reach this goal, but there are also other strategies you can use to grow your personal capital, too. Consider the benefits of enrolling in an annuity. Through the multiple annuity options available on the market today, you can plan and budget your long-term financial security.
Here at Sovereign Financial Group, we’re committed to helping all our neighbors and friends in greater Chicago establish a strong financial plan for their short- and long-term financial needs. We’re a team of knowledgeable financial experts, and we understand the risks and rewards of paying within the financial market. Our goal is to put your assets into as safe as an investment as possible, so that you’ll receive financial protection for the rest of your life.
To set up an appointment today, call us at (708) 713-4456 or contact us online.
Common Annuity Questions
What is an annuity?
Annuities are long-term investments meant to grow your money, based on a specific risk factor, which will offer you the option of additional income after retirement. All in all, you can invest in an annuity to protect yourself from outliving your income, which often becomes more limited after you no longer work. Some annuities offer living benefits, and nearly all also offer a death benefit.
When your agent enrolls your assets in an annuity, you pay the insurer a premium to establish and maintain the account. Over the years, the investment in that account will grow in value until you are ready to use the money. In most cases, your insurer will invest the annuity funds. That way, the account will accumulate earnings to provide you a better return on your initial funds.
How do annuities work?
There are four primary types of annuities, and each affects the eventual income that you will receive from the investment.
Fixed annuities guarantee an interest rate of return, allowing you to better plan long-term solvency. This is the most conservative kind of annuity.
Indexed annuities are tied to a stock market index like the S&P 500. This is a conservative investment strategy, but it also offers the possibility of increased returns above the fixed amount of a fixed annuity.
Immediate annuities require a single premium; you would invest with a onetime lump sum of money and immediately begin to receive income payments.
Variable annuitiesallow you to invest in other markets to increase not only your risk but also your return. Most variable annuities have step-ups and surrender charges. Being able to invest in riskier funds allows the account balance to grow significantly. When the account balance grows, you receive more income
The perk of an annuity is that you can trust that you will receive income for life at a certain age. The longer you wait to take income, the more you will receive. Your annuity provider will offer you a much more manageable level of risk when it comes to maximizing your return on investments.
What annuity options are available?
Within fixed and variable annuities, you have several different plan options available to help you manage when you will receive payments from your account.
Immediate annuities can pay you within a short period after investment. Your issuer will figure how much to pay based on factors like the principal in the account and your life expectancy.
Deferred annuities act in two ways. During the accumulation period(which can last years) you let the money in the account grow. After entering the distribution phase (usually after your retirement) you will begin to receive the funds from the account.
One of the dedicated agents at Sovereign Financial Group can assist you in determining which annuity option will make your plan as effective as possible.
The Benefits of an Annuity
The fact that annuities equal income can help you plan a support system for your later-life financial needs. Often, they will provide you with a lot of flexibility to maximize your income at a time when you might no longer be receiving a regular paycheck. Plus, you can often carry annuities alongside other accounts like 401(k) or 403(b) pensions. With it, you’ll create a larger financial cushion to use later.
Additionally, no limits exist on how much money you can invest in the annuity. You will, however, have to keep in mind that annuity income is taxable. Still, annuity funds grow tax-deferred until you begin to withdraw money. After that, you only pay regular income tax.