Fixed Annuity – Types & Features
Financial instability is the most common problem faced by the individuals after they get retired from their profession. Retirement is a phase that leads retirees towards a life, which is devoid of any significant means of earning. Money is the basic requirement of people in recent times and hence it is important for each and every person to have a considerable earning, which is not only required to provide a luxurious living to the old individuals, but avail proper health benefits as well. Immediate and fixed annuity are the two major types of annuity plans with most flexible features, which make old age living comfortable in all respect.
Phases of Fixed Annuity Investments
Fixed annuities are the plans, which are purchased from an insurance company either with the help of a lump sum or through periodic payments, which the annuitants can make during their service tenure. The rate of return that the annuitants get in case of fixed annuity is set throughout the investment phases. These phases of investment are – accumulation phase and annuitization phase. The former is the range of time when the annuitant seekers make lump sum or periodic investments to their fund in order to ensure a healthy-wealthy life after retirement. While, the latter is the stage where an annuitant starts receiving his regular income in return to what he has invested in his retirement fund.
Types of Fixed Annuity
As far as the annuity schemes are concerned, the individuals who enroll for these schemes can either opt for enjoying the income for lifetime or they can even specify a particular range till which they want to avail these facilities. Based on this very fact, fixed annuity schemes have been classified into two major categories as explained below:
Life Annuities: Fluctuations are quite common when it comes to life annuities. In case of early death or sickness of an annuitant, the amount that he was receiving is affected to a great extent, which then impacts the earning of the expired annuitant’s spouse. As per the terms associated with these plans, the longer the payment lasts, the lesser would be the amount received by the annuitant or his spouse. A life annuity is also classified into several types, which include straight life, substandard health and joint life with last survivor annuities. Each and every classification, however, has its own pros and cons. Hence, before enrolling for any of these programs, an annuity seeker must try to get the hang of all of them.
Term Certain Annuities: The term certain annuity is completely a different concept compared to the schemes of life annuity. It is a plan enrolling to which, undoubtedly guarantees a regular income but only for a specified range of time. Once the expiry date arrives, the individuals stop receiving any kind of cash inflow from the insurance companies. If in case, the annuitant dies before the completion of his annuity tenure, the lending institution keeps the remaining money with itself.
Going through the above-mentioned points will surely help you decide which fixed annuity option would best suit your needs and requirements.
Comments
Leave a Reply
