A Florida Annuity is a contract between a person and an insurance company in which the person pays a certain amount to the company in exchange for an income later. An annuity can pay or be deferred during the lifetime of the person purchasing it. Many people use this as a form of retirement income to supplement Social Security.

There are two principal types of annuities. An immediate annuity (SPIA) is one in which the person pays a certain amount to the insurance provider and draws a portion of this each week or month as income. A deferred annuity is one in which a person pays mon ey to the insurance company who holds it and pays interest to the account over time. This is the most common type.

Unlike an IRA that one pays with pretax dollars and must abide by strict rules, an annuity is paid with post tax dollars and has no limits on the amount one can contribute each year. A portion of these contributions are reported to the IRS as nontaxable. All of the interest is tax deferred until the person starts drawing money out of the account.

Some people also use an annuity like a life insurance policy. The difference is that any balance remaining in the account upon the death of the owner is immediately available to the family without having to go through probate. This is because there are laws that state it is impossible for a recipient to outlive the annuity.

Another division in annuities is between fixed and variable annuities. Fixed annuities pay back a fixed amount that is backed by secure bonds, mortgages, and/or other fixed dollar amount investments. Variable annuities pay variable amounts based on the value of sto ck market investments and variable rate bonds.

An annuity is defined as a cash balance plan. This is because the benefit is defined at the outset and will not change with the age of the account. This differs from a 401(k) plan, which is a defined contribution plan that pays out different amounts based on the amount contributed and how long the contributions were made.

In the event of disability if one owns an annuity and is over the age of 50, you are allowed to forward average and take disability income from that annuity.

Older adults can benefit from the purchase of an annuity that can fund long term care insurance premiums or benefits. All younger people should give serious consideration to making this a part of their overall retirement plan. This is because the growing number of retirees beginning to draw Social Security has placed the trust fund in a bad situation. Very soon, payments will exceed collections. There is fear that Social Security will not be there for the younger generation.

There are many different ways to view and purchase a Florida annuity. Most insurance companies offer one or more types of annuity contract. The cost of an annuity is based directly on the amount one desires to be paid when he/she begins drawing, the age at which he/she will begin drawing, and his/her life expectancy. Any money paid in that is still in the account at the time of the person's death will be available to his/her family, much like life insurance benefits without the wait for probate. Courtney Group Financial, LLC makes this all possible.