Understanding Annuities–Help for Investors from Texas Department of Insurance

Understanding Annuities–Help for Investors from Texas Department of Insurance

Understanding Annuities–Help for Investors from Texas Department of Insurance 150 150 Robert Rex, Esq.

The Texas Department of Insurance provides an Information Center on their website as a resource for investors and consumers.

Investors considering the purchase of an annuity can learn a great deal from the webpage on Understanding Annuities, which defines an annuity as ” a contract between you and an insurance company. An annuity is designed to be a financial tool for saving money that might increase in value over time and provide a steady income. The most common use for annuities is to build retirement savings. Other uses include building a financial legacy to leave your heirs and creating an income stream. ”

The Department of Insurance breaks down an annuity into an Accumulation Phase, during which time contributions are made and interest is earned,  and the Payout Phase, when the investor begins receiving payments from the annuity. There are various payout options, depending on the structure of the annuity:

  • a fixed amount option that provides a payment for the time period stated in the contract
  • a life only option in which the company makes payments to you for as long as you live, but there aren’t any benefits to your beneficiaries after you die. You won’t outlive your money because the company will continue to make payments to you for as long as you live.
  • a life option with a period certain. This means that you receive a payment for your lifetime, but payments are guaranteed to your beneficiary for a period of time such as 10, 15, or 20 years from the beginning of the lifetime payout to you.
  • a joint and survivor life option in which payments are made to you or a survivor for as long as either is alive.

Investors should study the provision dealing with surrender of the annuity if money is withdrawn early. Surrender charges generally decrease the longer the annuity is owned.

See the entire article here. 

Rex Securities Law , with offices in Boca Raton, FL,  and  Austin, TX,   provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.

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