Annuity loans – helpful or harmful?

The world is full of uncertainty, indeed! This is the reality that everyone can not deny. That’s why many people are looking to invest into something thought to be useful in the future. One of these is investment annuity where an individual is in agreement with an insurance company to make equal payments for a specific period during which the latter will pay back the money invested early with a significant increase in the additional benefits like lifetime loan.

First, in an investment of annuity, the money allocated for this becomes tax-free and certainly has the opportunity to grow as time passes. The gains in an annuity are tax free by nature so high returns are expected in the future. Generally, the more the half of the amount invested and the corresponding interest accumulated will be received through annuity loan anytime soon depending on the payment history of the investor and the investment scheme without paying unnecessary burdens.

Annuity loans typically take five years to be resolved unless otherwise stated within the clause. But it is worth noting that some insurance companies have their value investors an extension on the repayment scheme for loans for purchase of residential real estate, of course, to consider the ability of the investor. Generally the terms maybe extended up to twenty years. But it is not always a bed of roses. There are also disadvantages connected with this annuity loan.

For one, inability to pay the money in time can be very harmful. This amount will be treated as withdrawal. Worse, the interest rate on keeps piling on the outstanding loan balance once you cannot fulfil the obligation to repay the amount paid including interest, loan fees, and two tax if there is. Unpaid loans have tremendous impact on your annuity account. Earnings potential of your annuity will be reduced.

Now if you consider applying for an annuity loan, just make sure that you’ll be able to pay on time, otherwise it will suffer the consequences. Will be greatly benefited from loans with annuity if you have carefully planned and properly used, but is very dangerous even if you know what I mean. So take time in doing so.