By: Mike Anderson
Submitted: 2011-05-03 23:48:38 | Word Count: 569
Gambling is something that an individual must voluntarily abstain from and more so when it comes to retirement issues. The retired life of an individual is in the hands of the individual himself hence it becomes very important that the individual make correct and calculated decisions to ensure a secured retirement. The market has a number of offers in the guise of finance vehicles. It is up to the individual what he chooses for himself and what he rejects. Basically the different fund vehicles have been devised keeping in view the various assets and requirements of different individuals. For an individual who does not possess a property that can yield adequate money the best alternative is that of annuity. The scheme of annuity in itself includes further branching so as to facilitate the diverse requirements of the numerous annuitants.
Annuity as has already been mentioned can be further branched into fixed annuity and its variable form as well. This scheme actually involves core finance, that is to say that it deals completely in money. It is solely investment oriented and deals in the cycling and recycling of the same. This scheme primarily consists of two predominant cycles, the former being the investment cycle and the latter that follows the investment phase is that of the income cycle. The first part involves the investing of money by the annuitant in the insurance company and the next part involves the payment of cash to the annuitant by the insurance company. The money thus paid can either be received as a monthly income or can also be taken all at once in the form of a lump sum.
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The variable annuity generally involves a lot of risk and gambling as in this case the insurance company invests the money of the annuitant in stocks and shares. The amount that will be received by the annuitant will be solely dependent on the profit or loss earned in the process. In this form the annuitant actually stands the chance of receiving a lesser amount than the amount that he had previously invested in the company.
Hence it is imperative that the individual who is planning his retirement and is contemplating annuity as an option must thereby take due notice of the terms and conditions of the different schemes that it has to offer. For individuals who are not in a position or may not be willing to take up risks, the best alternative is fixed annuity. This option invests the amount of the annuitant is the safer and zero risk options so as to ensure a fixed and constant source of return. In this format the annuitant is free from any kind of risk pertaining to the reduction of the amount invested.
However one thing that the individual in concern must keep in mind irrespective of fixed annuity or variable annuity is the reputation and credibility of the insurance company one is investing in. the reason behind this being that if the individual does not make an informed decision in such cases, then one can even lose the entire investment, in case the insurance company closes down after the deal is struck. The insurance company does not bear any liability whatsoever in terms of repayment once it has closed down.
