An Immediate split annuity is a plan which allows the investors to purchase at least two annuities with a single premium payment. It refers to the splitting of a large sum of money between two or more annuity plans and companies. A split annuity is a conventional approach which provides current income, preserves capital value and reduces risk of interest rate.
The person who is best suited for such scheme must have a high net worth or nearing their retirement age. Their aim should be earning immediate income and preservation of capital. The person nearing their retirement have high sum of money to invest to such policies.
To make it clearer, immediate split annuity is demonstrated taking two basic annuity plans. The first annuity policy will be a single-premium immediate annuity, which will provide direct income to the investor. This type is for a fixed time period and gives income for a specific time period only.
The second one is the deferred fixed annuity; it grows in the period of five years, giving the investor choice to have current income and at the end of five years, enjoys the accumulation value which is equal to the original principal value.
The purpose of immediate split annuity is to provide current income, the same which an immediate annuity does. The payments are guaranteed and give us larger income payments. The concept of split annuity is based on the principle, known as "laddering", which is usually seen in bond investing.
This concept brilliantly manages a series of short term investments and minimizes the risks. In this way, the proceeds can be reinvested at the time of maturity. The most important risk which can be avoided through this policy is the interest rate risk.
The other advantages which can be enjoyed by investing in immediate split annuity are:
a. Regular income benefit, which guarantees us with regular and safe cash flow. Based on the income needs, this policy can generate regular monthly income from five to twenty five years.
b. It saves a lot of money on federal tax as a large part of immediate split annuity income is considered as return of original investment.
The basic limitation on this plan would be the age range. The age range for after-tax annuities is 0-85 and that of the untaxed is 0-70. The major drawback of this Immediate Split Annuity is that the internal rate of return may fall short on competing with short term investments.
The payments for this annuity can be acquired in many ways such as bi-weekly; weekly, quarterly, monthly, annually or semi-annually. We can receive the payments directly into our accounts. Thus, this plan can be considered as an intelligent strategy rather than an annuity. This is a smart way to invest in two annuities at the same time and make the future income secure. So contact your financial advisor now and ask about the immediate split annuity plan that is applicable to your particular requirement and how you can achieve the best from it.
Visit http://www.annuitycampus.com for more Annuity and Life Insurance Tips and Tricks.
Call Robert Eldridge directly at 800-643-7544.
Robert Eldridge holds over a decade of experience as a multiline agent in multiple states and currently serves on the membership council of the National Association of Insurance and Financial Advisors
Article Source: http://EzineArticles.com/?expert=Robert_C_Eldridge_Jr
http://EzineArticles.com/?Immediate-Split-Annuity---An-Intelligent-Investment-Plan&id=4824269
No comments:
Post a Comment