In the field of life insurance, one of the most well-known options that an investor can choose to invest in is the annuity. Although annuities are usually seen as investments that have a fixed rate of interest, there are many more benefits of annuity insurance that most investors would not even think about. Annuities allow the financial security of the individual that is purchasing the contract.

When an investor receives money from the sale of a contract they receive a monthly, guaranteed income for the life of that contract. However, the contract owner must be age fifty-five or over at the time of purchase. On top of that, if any optional benefits can be purchased with the annuity, like a medical insurance plan or the ability to include specific funds for retirement, an annuity income rider can be added.

Three basic options can be added to a contract. First, the contract owner can elect to withdraw six percent on the initial investment for up to ten years. This is called the Six Percent Withdrawal Benefit. This gives the investor the choice between withdrawing six percent and ten percent per month throughout the life of the annuity, which could potentially reduce the amount of taxes that are paid on the withdrawals.

Another option is the ten-year surrender penalty.

If the surrender penalty is elected, the annuitant will only lose ten percent per year. Any excess money will go back into the account. The tenth year is known as the Lifetime surrender bonus. This allows the investor to withdraw the whole amount or a portion of the remaining money without paying any tax or withdrawal penalties. Any remaining portion of the money will not be taxed.

Last but not least, there are Social Security options for retirement annuities. Social Security permits the investor to convert their annuities into Social Security income. This allows the investor to receive a monthly cash benefit. Withdrawals are limited to a one-time maximum of the total amount of money in the account.

There are many different benefits of annuity investing, but it is important to understand the risks as well. Most riders have riders that are considered negative riders. Riders that have the potential of creating financial hardships for the annuitant should be avoided at all costs. It is also important to look at all riders before deciding on an investment vehicle.

A qualified and knowledgeable personal injury attorney or financial consultant can help you evaluate the options that are available to you. He or she will also have an idea about what type of payment you should be able to accept. The final decision about how you will use the structured settlements that you have received should be made in consultation with a certified structured settlements consultant.

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