Annuities Pay on the Way to Retirement

The challenges facing many baby boomers include having to pay for their children's education, while possibly caring for an aging parent. This can come as quite a shock to most people who, in addition to all that, have their own approaching retirement to worry about.

However, annuities can help ease the financial burden. Annuities are flexible insurance contracts designed to provide income and tax-deferred growth, while helping people achieve their long-term savings and retirement goals. There are many different types of annuities, but for our discussion here are the four major types:

• Fixed annuities: These are contracts that pay out a fixed benefit for the life of the contract. The underlying investments are chosen by the insurance company.
• Variable annuities: These contracts can pay a variable benefit amount based on an underlying index or on mutual fund results. The underlying investments are chosen by the annuity holder.
• Immediate annuities: These typically pay an income to the named annuitant (the person who is entitled to receive benefits from an annuity) about one month after receipt of a large single premium.
• Deferred annuities: These contracts are similar to immediate annuities, except the payment option is deferred until a later date or milestone is reached.

One of the key features of annuities is the flexibility they offer by allowing you to put money into these savings vehicles on a pretax or after-tax basis.

Also, annuity holders have a choice as to how they want to invest the money within the annuity as well as how they would like to be paid during the payout phase of annuity contract.

Annuities can be a good tool to help you reach your financial and retirement goals. They are offered by life and annuity insurance companies, and it is important to periodically check on the financial strength of those carriers. Below is a list of the top 10 annuity writers on the basis of ratings.

The chart also shows a breakdown between individual annuity writers and companies that write on a group basis. Teachers Insurance and Annuity Association of America, State Farm Life Insurance and Pacific Life Insurance are in the top tier of annuity writers because of their excellent overall financial strength, though every company mentioned on this list offers excellent financial security.

Top-Rated Annuities Providers
	Company Name	Safety Rating	Total Premiums Ordinary Annuities	Total Premiums Group Annuites
1	Teachers Ins and Annuity Association of America	A+	7,117,111,000	2,677,523,000
2	State Farm Life Insurance	A+	487,776,000	0
3	Pacific Life Insurance	A	7,140,421,000	424,190,000
4	New York Life Insurance and Annuity	A	5,242,568,000	0
5	Massachuesetts Mutual Life Insurance	A	1,442,095,000	6,315,984,000
6	Northwestern Mutual Life Insurance	A	995,834,000	276,810,000
7	New York Life Insurance	A	628,579,000	2,073,478,000
8	USAA Life Insurance	A	385,042,000	517,000
9	Southern Farm Bureau Life Insurance	A	232,073,000	2,777,000
10	Auto-Owners Life Insurance	A	63,320,000	88,848,000
Source: TheStreet.com Ratings