Written by James Lyons
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What are annuities? An annuity is a contract or agreement by which one receives fixed payments on an investment for a lifetime or for a specified number of years. That's simple enough. Annuities can be a wonderful income stream for people, but money conscious people looking to build significant wealth want their money now to build it for the future.

An annuity is an investment vehicle primarily sold by insurance companies. Every annuity possesses two essential elements: whether the payout is instant or deferred, and whether the investment type is fixed or variable. An annuity with instant payout begins payments to the investor immediately, whereas the deferred payout means that the investor will receive payments at a later date.

Annuities and Their Drawbacks

The idea of a fixed annuity is that you give a sum of money to an insurance company, and in exchange they promise to pay you a fixed monthly amount for a specified length of time, either a fixed period or for your lifetime. In essence, you are converting a lump sum of money into an income stream. Whether you choose period-certain or annuitization, the payment does not change, even to account for inflation.

For this reason, a number of people consult note brokers to get a lump sum from their annuities. They might stumble upon a better investment opportunity or suddenly need a substantial chunk of cash. Perhaps they have a teenager wanting to attend a private university. Maybe they want to purchase a new car or put a down payment on a house. Regardless of the motive, note brokers make noteworthy commissions on these deals while providing a needed service. It's a gig worth pursuing.

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