By: Julia Aidan
Submitted: 2009-06-19 13:36:02 | Word Count: 585
Annuity policy is different. And life Insurance is different. A document is a process of action selected from different choices with given conditions which leads to the decisions made for present and future. Annuity policies are usually sold by Life Insurance companies.. It is a codified understanding between the insurance business house and the person (policy holder).
The benefit of annuity policy is it provides a steady income to the policy holder over a stipulated period of time or until death.. Annuity in general is a policy which guarantee the holder certain stipulated benefits against payment of premiums, as agreed. The policy holder can opt for a joint holding along with the spouse or another individual.. The premium disbursement to these policies close down on the death of the primary owner of the policy but the income guarantee continues and the beneficiary of the joint holder receives until he/she is alive.
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Annuity has a death benefit. It can be more than the money paid. It is also equal to the money paid. Annuity is purchased by only premium payment, or through payment for a period which may last up to 20-25 years, depending on the requirements of the scheme and the policy holder's selection. selected in two ways; the fixed annuity and the inconsistent annuity.
In a fixed type of annuity the policy guarantees a fixed amount of return.. This is because the insurers decide the rate of fixed interest to be paid during the tenure of the policy. Fixed type of annuity gives a small return may be at par with the bank interest.. But with this growth the benefit to the policy holder may not cope with the rate of price rise a decade after his policy. The benefit of this policy is it provides a steady income to the policy holder over a stipulated period of time or until death.. However this policy is protected and secured.
Variable annuity has risk. It depends on stock market. This is a brave alternative for interested individuals, but is not preferred by many because of the risk factor. Variable annuities provide a variety of fund investment in their portfolio.. For example, share fund, debt fund balanced fund or a cash fund. One has to invest in these funds on the prevailing rate of the units.. These policies pay the total stock value on the day's NAV. NAV is cost of the asset. This is the actual achievement indicator of a fund. A fund's NAV is calculated by taking into account the total assets minus all expenses and then divided by the number of its total outstanding units.
Equity schemes primarily invest in equity shares of companies. If the price rises you get more money. If the prices do not rise you get less. But these plans risk are higher and thus the income may vary.
Debt fund invest on bonds. It also invest in government securities These schemes are much less unstable than equity schemes.
Balanced schemes invest both in equity market and debt market to balance the portfolio. |Blanced scheme invest in debt market. It also invest in equity market}.
In a cash fund the money is not invested in the equity or debt market which guarantee the policy holder the guarantee of their cash, which is free from any risk. The money may not grow here. It will also not come down.
