1989719848_ea49c65b2f_zA Contract between an individual and a life insurance company is called an Annuity. This system is quite helpful for generating income on retirement life. There are more benefits of buying an annuity. This kind of pension product secures for steady cash flow during the retirement and receiving a regular income as a return for the lump sum amount paid up front.

Variety of options:

There are a number of options available for choosing annuity. Say, for instance, a married individual can stick on to either or survivor option which means after the investor’s lifetime the spouse can get the returns of the annuity.

The life insurance company agrees to return a guaranteed income till the rest of one’s life while depositing a lump sum of money to buy an annuity. Hence the individual need not bother about how long the life period will be. If one buys an annuity, he / she need not search for additional investments and the individual knows the exact amount as how much is going to be received every month as income.

Meet other financial planning goals

The annuity can be used for other financial planning like supporting your beneficiaries with money, leaving a gift to a charity. It has been ensured that the insured annuity gives a steady flow of income during your lifetime and it has been paid to your beneficiaries as a lump sum after your demise.

Every life insurance providers or annuity agents provide annuities calculator in both forms manually and through online. The investor can directly see the options of various companies with different quotations. One can choose the best option for them.

Types of annuity:

There are fixed rate annuities, longevity and variable annuity types are available.

In fixed rate annuity, individual cannot choose the investment whereas the job is handled by the insurance company. The company involves in paying the individual with a pre-determined fixed return.

A variable annuity provides a chance to an individual to decide how to invest money in the sub-accounts (mutual funds) that are offered within the annuity. Based on the funds’ performance only the individual’s account value is ascertained. Though the variable annuity has tax-deferred growth, the annual expenses are higher than the regular mutual fund’s expenses.

Longevity Annuity:

It protects individual’s life in later years. To receive a payout from this type of annuity one has to wait till reaching 80 years or to begin receiving a payout. The annuity provides a guaranteed regular income till the end of one’s life if the payout starts to begin. It is usually considered as a supplemental retirement investment. A portion of the retirement amount say 10% to 25% could be invested in this plan. The money invested in longevity annuity grows until one starts to receive the payouts. If the investor dies before begin to receive payouts, his / her heirs won’t get anything.

There are many annuities calculator available in the market which can forecast the precise return amount based on your investments. Annuities do great things for consumers who want to save the money from taxes, creditors, and probate but it is an ideal savings plan for those who expect guaranteed income and principal.

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