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Annuities
Some banks sell annuities. Annuities are investment products that can
pay you a return annually or at regular intervals. When you buy an annuity, the
insurance company invests your money and agrees to pay you back according to
the terms of the annuity contract. Annuities can be part of a long-term
retirement savings plan. Like mutual funds
, annuities are not insured by the U.S. government or guaranteed by the bank.
Some annuities help you set aside money on a tax-deferred basis until you
retire. You don't pay taxes on the income earned by this money until you
retire. Other annuities allow you to receive income immediately -- but the
income you receive can go up or down with changes in the financial markets and
the income won't be tax deferred. For more information about annuities, see the
reference list at the end of the brochure.
Before you buy an annuity, you should review the annuity contract. That
document will spell out the terms of your agreement with an insurance company.
You should also ask whether your annuity contract can be transferred to another
company.
Next:
What Are Some of the Fees Associated with Investments?
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