An annuity is a financial instrument that has similarities to a savings account or a CD. This type of financial instrument is created when you contract with an insurance company to deposit an amount of money in an annuity fund. The money you deposit in the annuity earns interest over time, which is untaxed. If you want to withdraw money from your annuity, you will have to pay a penalty fee.
Then, at a time specified in the future, the insurance company will begin making regular payments to you for as long as your annuity contract states. At the time of payment, the interest you earned will be taxed.
There are three common types of annuities:
If you die before your annuity starts paying out, then your beneficiary can either receive the cash value of the annuity or take over your payments. Your contract will determine what happens if you die after your annuity has started to pay out.
If you or your beneficiary has a conflict with the insurance company that sold you your annuity, you may need to go to court. Understanding your annuity contract and laws relating to it can be very difficult. A qualified attorney will have an easier time explaining to you exactly what your annuity contract means for you and your loved ones. Additionally, an attorney knows your state's laws and has experience dealing with insurance companies.
Last Modified: 01-11-2018 12:45 AM PSTLaw Library Disclaimer
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