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What is an annuity & how does it work?

In the U.S., an annuity is a contract for a fixed sum of money usually paid by an insurance company to an investor in a stream of cash flows over a period of time, typically as a means of saving for retirement. In many cases, this sum is paid annually over the duration of the investor's life.

How do I know if my annuity has a minimum rate?

The minimum rate should be listed on your annuity statement or contract. Payout schedule. Some annuities pay you in installments for a specific period, such as 10 years, while others may give you installment payments for your lifetime. The payout schedule will affect if you even receive a payment every month.

What is an immediate annuity?

An immediate annuity involves an upfront premium that is paid out from the principal fairly early, anywhere from as early as the next month to no later than a year after the initial premium is received. This means that, for the most part, immediate annuities will not have accumulation phases.

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