Hybrid Annuities Split Funds
A retirement fund that allows an annuitant to split funds between fixed and variable rate components are called hybrid annuities. The income can be invested by dividing the savings in conservative savings. It offers a low rate of return but a guaranteed payout rate. In variable-rate of return it carries risk but offers higher interest potential. However all annuity planners have offered tax-deferred income with growth, including guaranteed payout and according to critics the biggest knock in these is that they are not liquid instruments. For several years (five, ten to twenty) your money is locked up.
A Break from Tradition
Hybrid Annuities offer a break from tradition to invest in savings that serve several needs. It is an alternative form of contractual agreement offering both growth and income. The investment is divided into two contracts. However, a question may pop up. How well do they serve the purpose? The performance of each of the functions in both fixed and variable annuities.
Dual Nature of Hybrid Annuities
The name hybrid suggests two main types of annuities, such as fixed-rate and variable-rate contracts. Both are housed within the same chassis. Standard litany of their features offered is displayed. It includes living or death benefits riders. In addition to accelerated payouts for chronic diseases. Variable annuity investment allows for the growth of money in mutual funds. A fixed annuity allows guaranteed income to the client. They perform two different functions that augment cash flow. Hybrid Annuity capitalizes on the point that they provide both growth and income.
Income and Growth
Hybrid Annuities are for those who are seeking income alongside growth. An annuitant who is oriented towards receiving cash flow in keeping pace with inflation. A steady income source on a regular basis. The risk factor that goes with both fixed and variable annuity depends on the growth in investment. It will decide their decision to put a certain amount in a fixed annuity. And the remaining in a variable annuity. The fusion of investment options makes an obvious choice to go for a hybrid annuity.
Hybrid Annuity according to advisors is not an ideal choice for youngsters. They have several decades to pass before retirement and even for candidates who are well into retirement hybrid annuity are not recommended by advisors. It is for those who are sophisticated, especially those who thoroughly understand the nuances in it. It is a good fit for such minds who know how hybrid annuities work. Besides the age factor does not come into consideration. However similar restrictions may pop up for them as well.
Key Benefits
The key benefits of hybrid annuities that are on offer attract clients to them. One such offering is the fixed income inflation period. The dual nature of hybrid annuity offers assured payout and this is in spite of a low level of downside risk in market fluctuations the performance of the variable income is not taken into consideration. The bottom line is hybrid annuities showcase the fastest income growth option. Their selling point is the combination of dual annuities on a single platform. Two products have been merged into one vehicle which proves their true value.
