Principal Annuity Service Center

How do insurance companies make money on annuities?

All insurance companies make their money on fixed annuities from what they earn on their investments of the premium paid by the client. They have done their calculations to determine an equitable interest rate, cap, or bonus for the client while speculating on earnings from the market. This is the simple answer.

Is the principal guaranteed in an annuity?

The annuity's guaranteed principal protection promise is only as good as the company making the promise. If the insurance company goes belly up, the guarantee is worthless. Annuities, like everything else in the world, are imperfect. Make sure you understand the pros and cons of annuities before using one.

Can annuities be paid monthly?

CEO and Senior Agent, Outlook Life, Inc, Most of the U.S. Some annuities can be paid on a monthly basis. The premiums accumulate and draw interest until the annuitization phase, when you begin drawing out the money as income. Single premium immediate annuities can NOT be paid monthly.

What is a principal annuity?

Annuity Principal. The contributions one makes to an annuity. This may be a lump sum payment, but it is usually a series of contributions made on a monthly basis. The annuity principal is invested on behalf of the annuitant and forms the basis of the payments he/she begins to receive after the first withdrawal.