Variable Annuity in Florida
A Variable Florida annuity represents a contract between you and the insurance company. You agree to invest money with the insurance company, and in return they promise to pay you fixed or variable payments in the future. An important distinction between variable annuities and insurance is that variable annuities are not a life insurance contract.They share some similarities because they offer some type of death benefit. With life insurance policies;the death benefits typically are tax free to your heirs. On the other hand annuities in Florida and the US the death benefits is taxable to your heirs.
Variable annuities offer you the ability to invest in a portfolio of funds, which are called sub-accounts.These sub-accounts are correlated to market performance, much like mutual funds. The risk tolerance can be of the most conservative approach, similar to bond funds, or to more aggressive such as mid cap, or large cap or emerging market funds. Much like retirement plans, variable annuities can be funded with a lump sum, or with periodic investments, and all the capital grows and compounds tax deferred until you begin making withdrawals .
Here are some of the features of variable annuities:
Variable annuities let you receive periodic payments for the rest of your life, or the life of your spouse.This offers you the protection that after you reach retirement, you will not outlive your assets. Another feature that variable annuities in Florida provide is a death benefit.Should you die before the insurer has started to make payments to you, your beneficiary will be guaranteed to receive at least the amount of your purchase payments.
Here is how Variable Annuities work:
There are two phases - the accumulation phase and the payout phase.
During the accumulation phase you make purchase payments which you
designate through various investment options. By filling out an asset
allocation questionnaire, your risk tolerance and suitability gets
determined. These findings help to guide you and your investment
professional in choosing an appropriate investment strategy.So for a
retiree living in Florida, this will help to prevent you from entering
into strategies that are better suited to a much younger investor who
is willing to take on much more risk. You can usually transfer your
money from one investment option to another without paying tax on your
investment income and gains or any fees with most insurance
companies. Also you must be careful to not withdraw more than a
certain percentage of the account value or you may incur surrender
charges,
and jeopardize your income guaranty rider.
It is during the payout phase that you will receive your purchase payments plus your investment gains as either a lump sum or as a stream of regular income payments, typically paid out monthly. If you do opt to receive a income stream of payments, there are choices as to how long the payments will last.
Finally a common feature found in variable annuities is the death benefit. Upon your death the person you select as your beneficiary will receive the greater of all the money in your account or some guaranteed minimum, or the sum of all the purchase payments minus withdrawals.
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