Interest rates may be attractive compared to other rates for CDs, bonds, mutual funds, and other investments.
Your interest rate is set for a guaranteed period, often between 3 and 10 years, regardless of how the market is performing.
All taxes on interest are deferred until funds are withdrawn and there are no IRS contribution limits.
An annuity is guaranteed lifetime income that reduces the likelihood that you’ll run out of money while in retirement. Income from an annuity is a predictable, and steady source of income that cannot be outlived.
A fixed-rate annuity, otherwise known as a Multi-Year Guaranteed Annuity or MYGA for short, is an insurance company’s version of a certificate of deposit or "CD." A "CD" is defined as a time deposit or a financial product commonly sold by banks, and credit unions. CDs are similar to savings accounts in the regard that they are ensured "money in the bank" and thus virtually risk-free for the depositor.
While CDs are great for individuals with low-risk short-term savings goals in mind, fixed-rate annuities are better suited for individuals focussed on retirement savings, offering: higher crediting rates over longer periods of time, tax-deferred growth, the ability to annuitize upon maturity, and liquidity via penalty-free partial withdrawals from accruing funds available.
With a fixed-rate annuity, you can invest your savings over a specified period of time (typically ranging from 3 to 10 years), earning a fixed return (annuity) on that initial investment. The interest earned in your fixed-rate annuity is not taxed until withdrawn, and your principal is always guaranteed.
Learn more about fixed-rate annuities from in this linked guide.
Historically, annuities existed purely to provide a guaranteed source of income for life as a way to reduce assumed risk. But, in the interest of making them more valuable for individuals, insurance companies adjusted the product to include market-linked features and liquidity options.
These products, namely variable annuities and fixed indexed annuities, then allegedly provide guaranteed income, exposure to the market upside, protection from market downturns, and access to your funds in the event you changed your mind. While a single product that contains all of these features may sound appealing, they are hampered by high fees and limited efficacy by design.
These annuities are a jack of all trades (and master of none) whose complicated fee structures dramatically limit the market upside and reduce the amount of income you potentially receive. Moreover, fixed indexed and variable annuities offered by insurance companies may be lower rated than other standard income annuities.
Having more than one insurance policy with Homeland Insurance can save you not only precious time but ultimately more money. When you bundle more than one insurance policy together, like your homeowners and car insurance, you can save money on our already competitive rates with our Multi-Policy Discount.
Plus, by keeping all of your insurance policies in one convenient place, you can manage them effortlessly, all in one place. When you register for an account with eService you can quickly pay your bill, manage and track your claims, and even update your policies anytime, day or night.
There are benefits when you choose to bundle your car, home or other insurance policies. Get a quote today to see how much you could save when you purchase multiple policies here with Homeland Insurance.
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