Searching for sources that can provide extra income is something that has become high on most people’s priority list lately. The economy has a lot of people worried about the future, and that’s justified. Well, individuals that have invested in an annuity policy with an insurance company have one option open to them that others don’t. The funds that have been collected in the account can be taken out in the form of annuity loans.
Once money has accrued, it’s possible to withdraw the money but it’s actually not as simple as taking out the loan. This is because withdrawing the money calls for hefty taxes to be applied as well as other fees. Conversely, the funds that are built up in an annuity are tax-free, leaving the money to grow over time. Many people use annuities for the future, such as retirement, and after it’s grown without taxes all that time it can be very useful.
But what if you need the money now? A loan against annuity is designed to be paid off within 5 years and the interest is spread out over this time. Another way of using it is by putting it toward buying a home for the first time, and that eases the pressures of a traditional mortgage. The highest amount that can be loaned is $50,000, and of course the amount plus all terms and conditions depend on the company that issues it.
If you have invested in an annuity and plan to use it later on in life, it’s still okay to take out annuity loans. It can be risky though because you want to make sure that the cash is available to you later on in life, which could be one of many solid financial planning ideas. Keep up with payments, protect your credit, and plan for what may lie ahead by being responsible with your money.