By: Mike Anderson
Submitted: 2011-08-01 22:25:22 | Word Count: 544
Annuities may be defined schemes or plans which provide a regular income that is fixed over an extended period of time. They can be really beneficial for supplementing income after retirement. An annuity is an insurance product that helps in receiving income and can be very useful part of retirement strategy. People generally choose to invest in Annuities because they want to receive a steady income after retirement. In annuities you are required to invest in annuity and pay an amount of money in lump sum or multiple payments to the insurance provider. Then after a certain period of time the insurance provider provides you with guaranteed returns on a future date.
As these plans are very difficult for a common man to understand, one must always take the help of a professional and qualified financial advisor. There are generally two types of annuities, they are- deferred annuity and immediate payment annuity. However, there are several other options as well. They have both advantages and disadvantages and you have to choose the one plan that suits you the best. Deferred Annuities is the first type of annuity and the payment in it is deferred until a later date. This means that when an investor buys an annuity, they are required to keep the investment with the insurance provider for some time. Then the investor gets the payments after the certain period of time or when the investment reaches a certain amount. However, in immediate annuity, the investor has to invest a large sum of money in annuity in order to receive regular and steady monthly income.
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Finance is not only required in business, it is very important in our day to day life as well. Proper financial planning is required in order to manage money efficiently so that all our expenditures and liabilities of life can be met easily. Funds need to be managed more efficiently after retirement because the net income at hand gets reduced. Therefore, it is important to have an additional income along with the pension so as to lead life with proper standard of living. This is where investing in Lifetime Annuity becomes important.
A lifetime annuity is an annuity product in which there are two phases- fund accumulation phase and payment phase. As we all know that idle savings do not yield any benefits therefore it is always advisable to keep the money in bank or invest in some insurance product so as to earn a profit as they provide a certain rate of interest. That is why in the first phase of Lifetime Annuity your saving accumulates with the passage of time which results in growth of the annuity. This growth of annuity largely depends on the interest rate offered by the insurance provider. The next phase is the payout phase in which the insurance company distributes the income. This income distribution depends on the agreement of both the parties. It provides the investor a guaranteed income for the rest of their lives.
Hence, Annuities and Lifetime Annuity can really prove to be beneficial in order to receive steady income after retirement.
