Bonus annuities simply put, is a percentage of the amount you put into the annuity. Say you deposit $100,000 in an annuity and the insurance company is paying a 10% bonus. You would now earn interest on $110,000 that is a bonus of $10,000 plus the declared interest rate the insurance company is paying that year. Let’s say they are paying 3.5% so you put in $100,000 plus bonus $10,000 plus 3.5% is a first year yield of 13.85% return in money terms your account would be $113,850 at the end of the first year. Not bad, CDs and money markets don’t do that.
Some insurance companies pay a bonus on first year only premiums. There are companies that will pay a bonus for any new money put into annuity for the life of the contract. This works great for people that are saving money on a monthly basis or quarterly or even annually.
There are Bonus Annuities for Fixed Annuities or Equity Indexed Annuities as well.
Benefits of Annuities
CDs, Mutual Fund, Stocks, Bonds, and Money Markets do not always offer what Annuities can.
Which one of the above Benefits do you want to live without? I agree, none if you don’t have to and you don’t.