Annuities for Oregon
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Annuities are great tools which can provide guaranteed income for life! An annuity is a contract between you and an annuity insurance company which can provide you guaranteed income, in the form of payments from the insurance company. These income/benefit payments are provided to the annuitant (you) for a time period you choose (10 years, 20 years or even for the duration of your life!). This transaction is often called annuity insurance or annuity life insurance. First, you provide the initial funds to the Insurance company (either in a lump sum or in a series of contributions). Then, these dollars you’ve just contributed become an investment where the proceeds grow (tax-deferred) prior to disbursal. When these proceeds are distributed back to you (typically in monthly payments), any investment gains are taxed as ordinary income.
There are thee basic annuitiies:
Traditional Fixed Annuity – This plan provides a fixed interest rate that is guaranteed for a specific time period. It is guaranteed to never go below a specific percentage.
Fixed Index Annuity – The Interest rate credited to your annuity is tied to market indicators that you choose on an annual basis. When this interest is credited, you are guaranteed that it can never decrease as a result of future market performance.
Immediate Annuity – This is the attractive "guaranteed income stream." You can choose the time and length of the benefit period, enen income for your entire life! This is a great answer to the nagging fear of out-living your money.
Aside from "the big three" listed above, there are currently many options in annuities like Immediate Annuities, Long Term Care/ Annuities, fixed and variable annuities (to name a few). For specific annuity information and the most competitive Annuity Rates, we advise you to call today and see which annuity vehicle is right for you. We will simply educate and guide you through the various annuity insurance companies. UPDATE: Ask about the new innovative hybrid annuity/life "Asset-Based" Annuity products which can be used to help fund the costs of Long Term Care.
- How do you fund an Annuity? Your payment(s) to the Insurance company may be regular and periodic or may (in the limit) consist of a single lump payment (could be another investment vehicle, an inheritance, or general funds from your checking &/or savings account. The main purpose is to cover the costs of the company and to provide a source of investment funds.
- How does the annuity pay you back? The invested proceeds are gradually returned to you in the form of regular payments. These annuity payments represent taxable income (and return of principal) to the holder, not capital gains. These payments continue until you die, at that time your beneficiary (named by you) either receives the remaining lump-sum payment or opts to continue receiving the annuity payments.
Why do people buy Annuities?
The primary reason to have an Annuity is guaranteed retirement income. Most Oregonians want this guaranteed income when they stop working. This retirement income minimizes the risk of losing wealth and suffering fluctuations in their income. Fortunately, with an Annuity, a policy holder can achieve tax-deferred growth, retirement savings and the guarantee of lifelong income.
Another Popular Trend is using an "Asset Based" Hybrid, long term care / annuity to off-set the high costs associated with Long Term Care needs. The Annuity provides income to fund home care for those who want to stay in their own home. Also to help cover the skyrocketing costs of care centers (which are currently $6,000 to $8,000 monthly!). The real advantage that these asset based plans can provide a life insurance benefit to surviving spouse / children should you never need the policy. This is a huge upside compared to traditional "Long Term Care" insurance. Should you never need the policy, the proceeds are to be distributed to your beneficiaries (spouse, children, trusts).
Another recent trend is the increase of "gifting annuities." Many parents & grandparents are opting to give annuities as gifts to children & grandchildren. This generational wealth transfer option is very popular gift for recent graduates from High School & college, birth of a new baby & as a wedding gift. Annuities can also be helpful in avoiding probate expenses.
Currently in Oregon, most people buy their first Annuity at age 50 with the average annuity holders age at 66.