To know if bonus annuity is a good option for you, you have to understand what it actually means and what are the risks involved in it. Very simply put, a bonus annuity is a contract that gives a bonus on your invested amount. The bonus is provided by the insurance company when the investor deposits his money.
Usually the bonus offered by the insurance company ranges from 3% to 5% that is added to every premium payment that you make on your investment. This means a growing balance amount that keeps adding to your investment.
But you might wonder why an insurance company would do something like that. Well, the point to be noted here is that in return for this bonus addition to your funds, the insurance company will probably ask for a longer surrender period. The usual surrender period for annuities is 7 where as in bonus annuity, the surrender period can range from 8 to 9 years. Also, every bonus payment that is made subsequently will also have its own surrender period of 8 to 9 years.
Most insurance company provides allowances for withdrawal of a part of the premium payments without earning any penalty. In fact, you can usually withdraw 꽁머니 10000 around 10 to 15% of the payments. But it is to be remembered that any withdrawal from annuity funds is taxable and if the funds are withdrawn before 591\2 years of the investor, a federal penalty of 10% is chargeable on the amount.
Apart from the tax issue, an investor should also be aware of a few other points when it comes to bonus annuities. The first thing to know is that the broker usually gets an upfront commission when a bonus annuity deal is struck. It is always advisable to ask the broker if the option of bonus annuities is available for you, as he himself might not voluntarily advocate the fact to you.
Most importantly, you should always check the track record of the insurance company before investing in bonus annuities to see if they charge you any extra fees as compared to their other non bonus fund options. Some companies very slyly charge extra fees to pay for the bonus on premium. In case you are not satisfied with the information you posses regarding a particular insurance company, you can always contact an Annuity FYI expert to clear all your doubts.
As far as the insurance companies are concerned, as an investor, you should understand that the organizations themselves also benefit from offering bonuses. They get prolonged surrender periods and often greater demand for annuity from public. Therefore, it is a win-win situation for both sides involved in the transaction.
Bonus annuity is a very popular option amongst the masses today and it is a very favorable option for those who are looking for greater monetary benefits in the longer run. You should always check the pro and cons of every annuity policy before deciding to put in your payments and that goes for bonus annuity too.