A life insurance policy gives some protection against an early death. An annuity is also an insurance product, designed to help protect against the ever-increasing problem of outliving your assets.
Annuity products are a popular choice for investors who want to receive a steady stream of income during retirement. You can opt to receive payments for the rest of your life or for a set number of years, and payments can be distributed on a monthly, quarterly or annual basis - even in a lump sum. The size of your annuity payments are affected by a number of different factors, including: the account value, the payout option selected, and the performance of the underlying securities. And while annuities can be useful retirement planning tools, be aware of fees that may be charged by the insurance company to help them absorb their risks.
There are three basic types of annuities: fixed, variable and a combination of the two. All three allow your money to grow income tax-deferred, but each one is designed to meet different objectives.
A fixed annuity offers a guaranteed rate of return. Since these annuities offer a guaranteed rate of return, your money will be used to purchase conservative investments with historically predictable performance. Because the rate of return is guaranteed, the insurance company, not you, assumes the investment risk. Your risk with a fixed annuity is a potential loss of purchasing power due to inflation.
A variable annuity offers a higher rate of return by investing in underlying investment options. While it offers a potential higher rate of return, you risk losing all or part of the principal investment.
If you'd like to learn more to explore your annuity options, call us. We can help you determine if it is an appropriate investment for you.
Investors should consider the investment objectives, risks, and charges and expenses carefully before investing in the contract and/or underlying portfolios. The prospectus, and if available, the summary prospectus, contains this information as well as other important information. A copy of the prospectus may be obtained from Prudential.com. You should read the prospectus carefully before investing.
It is possible to lose money by investing in securities.
Any guarantees are subject to the claims paying ability of the issuing insurer.
Securities products and services are offered through Pruco Securities, LLC. Variable annuities are issued by Pruco Life Insurance Company in all states except New York where they are issued by Pruco Life Insurance Company of New Jersey. Variable annuities are long-term investment vehicles designed for retirement purposes. Variable annuity issues by Prudential Financial Companies are available at a total annual insurance cost of 0.55% to 1.95% with an additional fee related to the professional managed investment options.