Protection from creditors: Although this benefit varies somewhat by state, many states mandate that all monies that are placed inside variable or
other types of annuity contracts can not be attached by creditors.
Premiums for qualified annuities are paid with pre-tax dollars whereas
all other types of annuity premiums are paid with after - tax dollars.
They can have greater growth potential than
other types of annuities, but also have a greater risk of market loss.
In part 1 of our introduction to annuities, we talked about how income annuities and fixed annuities can add some stability to a financial portfolio by providing guaranteed income for life.1 In this video, we'll focus on two
other types of annuities: index - linked annuities and variable annuities.
Keep in mind, there are
other types of annuities as well, but these are some of the most common.
Variable annuities offer many advantages for retirement savers, including the potential for earnings that are higher than
other types of annuities; although, this comes with increased risk.
While they offer the potential for greater earnings compared to
other types of annuities, variable annuities also come with greater investment risk.
For the purpose of a guaranteed outcome,
other types of annuities are better.
Just like
the other types of annuities, these will grow tax - deferred, which means that you won't see taxes until you start paying out the annuity.
Even though the yield is not guaranteed they have the tendency to return investors a higher profit on their investment than
other types of annuities... like fixed annuities.
Those who put their money in stock subaccounts and leave it there for 20 years or more will probably see a higher return on their investment than can be had from
any other type of annuity.
Like
all other types of annuities, they can be either immediate or deferred with fixed or flexible premiums.