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A very popular strategy with annuities is to structure the account to provide a lifetime income, much like a pension, for the annuity owner and as well as a lifetime income for a surviving spouse, Brabham says. Cumulative Growth of a $10,000 Investment in Stock Advisor, Copyright, Trademark and Patent Information. Each Shield product comes with a choice of available Shield . 7 In 2022, used car prices hit an average of about $31,500. How Do Annuities Work? | Northwestern Mutual A guaranteed lifetime annuity promises to pay the owner an income for the rest of their life. Lack of LiquidityAnother concern is the lack of liquidity. Other similarities include tax-deferred potential, annual free withdrawal amounts as well an option convert into stream income payments in retirement. Both fixed indexed annuity nor rila directly participate equity investments but differ from one another by accepting higher risk with greater upside possibilities. It pays while you live; life insurance pays when you die, the Indiana Department of Insurance points out. Once you contribute the money to fund an immediate annuity, you cannot get it back or even pass it on to a beneficiary. Fixed indexed annuities and RILAs provide the opportunity for growth based on performance of stock market index. If this is a turn-off for you, an indexed annuity might be more preferable. SmartAssets services are limited to referring users to third party advisers registered or chartered as fiduciaries ("Adviser(s)") with a regulatory body in the United States that have elected to participate in our matching platform based on information gathered from users through our online questionnaire. But, like any financial strategy, annuities have their drawbacks. A deferred annuity is an insurance contract that promises to pay the buyer a regular stream of income, or a lump sum, at some date in the future. During the time between when you contribute funds and when you withdraw them, its possible that your money could grow significantly. Think of it as a second layer of protection.