Annuities create income security for consumers by providing guaranteed income for life, or for a predetermined period of time. This period of time is set at the time of purchase in the annuity contract between the purchaser and the insurance company. The money used to fund the annuity purchase is called the premium.
When the annuity contract allows the annuity buyer, or annuity owner to add additional funds or money to the annuity, then the annuity is called a flexible premium annuity. When an annuity contract allows only one single investment, then that annuity is referred toa s a single premium annuity.
Annuity owners wishing to add additional funds to a single premium annuity are not able to do so to an existing annuity and must create a new contract or purchase a new annuity. Single premium annuities are mainly purchased as fixed rate annuities because the annuity buyer is able to lock in a set rate of return for a specific period of time that is similar to a Bank CD.
Tags: annuities, Annuity, consumer advice, Financial Services, fixed annuity, flexible premium, Insurance, Insurance policy, Investing, Investments, Personal Finance, single premium
