B&P Financial Services

Morristown, NJ 07960

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Annuities & Investments


Fixed & Variable


Immediate & Deferred

There are many different types of annuities, and while some are good for your retirement, others can be detrimental. Few people are aware of the advantages of annuities. In fact, most people are concerned that Annuities will cost a lot.

We all want to make sure that our retirement savings are safe, but the truth is that annuities are not always the best option. Annuities aren’t inherently bad products, but most products out there are not made for the average Joe.

An annuity is a new kind of investment contract where you pay a premium, and receive guaranteed payments for life. It’s a great way to generate income, with the added benefit of never running out of funds.


annuities investments
discussing annuities

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Variable annuities

A variable annuity is a type of investment that you may want to consider if you are looking for upside potential, tax-deferred growth potential, and benefits that are not available in most other types of annuities. A variable annuity has several advantages . The first advantage of a variable annuity is that it provides you with more diversified options. With a variable annuity, you are able to invest in a number of different types of funds.

annuity dues

An annuity due is an annuity whose payment is due immediately at the beginning of each period. This is the opposite of most annuities which are payable at the end of the period. The APR of an annuity due is just the interest rate that is being charged on the loan. The reason this is important is that an insurer can charge you an interest rate above the stated interest rate without having to add a surcharge.

annuity payouts

For some investors, an annuity can be an appropriate part of a sound financial plan. However, one factor that is commonly misunderstood is annuity payout. Payout options are the way the annuity disburses the funds over time. This is key in deciding whether an annuity is right for you. For example, you should consider the annuity’s offer of immediate or periodic payments; the frequency of those payments; and increasing the amount you receive.

Fixed annuity

Variable annuities are insurance products that allow investors to utilize mutual fund equity exposure, bond exposure, or both. Benefits include tax advantages and asset allocation benefits. It also has some risks, such as fees and charges, taxes, and the possibility of losing some of the initial investment. Fixed annuities are long-term contracts issued by insurance companies that pay a rate of return based on the contract’s term.

The Truth About annuities

How do annuities work

An annuity is a contract between an individual and an insurance company. The investor contributes a sum of money—either all up-front or in payments over time—and the insurer promises to pay them a regular stream of income in return.

With an immediate annuity, that income begins almost right away. With a deferred annuity, it starts at some point in the future, typically during retirement. The dollar amount of the income payments is determined by such factors as the balance in the account and the age of the investor.

Annuities can be structured to pay income for a set number of years, such as 10 or 20, or for the life of the annuity owner. When the owner dies, any money remaining in the account typically belongs to the insurance company. However, if they live happily to, say, 135 years old, the insurance company still has to keep those regular payments coming.

The Pro's of Annuities

Guaranteed Income

The insurance company is responsible for paying the income it has promised, regardless of how long the annuity owner lives. However, that promise is only as good as the insurance company behind it. This is one reason investors should only do business with insurers that receive high ratings for financial strength from the major independent rating agencies.

Customizable Features

Annuity contracts can often be adapted to match the buyer’s needs. For example, a death benefit provision can ensure that the annuity owner’s heirs will receive at least something when the owner dies.

A guaranteed minimum income benefit rider promises a certain payout regardless of how well the mutual funds in a variable annuity perform. A joint and survivor annuity can provide continued income for a surviving spouse. All of these features come at an additional price, however.

Money-Management Assistance

Variable annuities may offer a number of professional money-management features, such as periodic portfolio rebalancing, for investors who’d rather leave that work to someone else.

The Con's of Annuities

High Commissions

When it comes to the commissions made for selling annuities vs. mutual funds, the former is almost always higher than the latter. Say an investor rolls a $500,000 balance in a 401(k) into an individual retirement account (IRA). If the money is invested in mutual funds, the financial advisor might make a commission of about 2%. If it is invested in an annuity that holds the same or similar mutual funds, the advisor could make a commission of 6% to 8% or even higher.

High Fees

Most annuities do not assess sales charges upfront. That may make them look like no-load investments, but it doesn’t mean they don’t have plenty of fees and expenses.