An annuity can be explained as an income paid by an insurance company for a particular period in exchange for a lump sum payment. There are a number of annuities available which are based on different annuity rates. As there are different income group persons, they opt for different type of annuities according to the level of their incomes. An investor will receive a regular income from the annuity provider and its level is determined by taking into consideration a lot of factors such as the age of the investor, whether he wants fixed income or an income level that increases year on year, current gilt returns and how long the income is payable for. Annuities can be payable for a certain period of time or for the lifetime of the investor.
It is always a very difficult task for a person to select the right annuity for him. In such a case, it is better to take specialist independent advice. This will prove very beneficial as they will help a person to choose the best possible annuity for him by taking into account all the important factors.
Annuity helps in tax saving. It is so because when a person buys an annuity his money becomes tax deferred until he start withdrawing his funds. Once the investor starts receiving annuity payments, only the part of investment that was gained is taxable. All annuity plans give an offer of a cancellation period. During this time period, investor can cancel the annuity without early withdrawal charges.
On the basis of annuity rates, there can be many annuities out of which one is the income annuity. The income annuity is a type of annuity that is very common with retirees who are more than 65 years old. As it is cleared from the name of this annuity, the main aim of this annuity is to provide the investor an income. This annuity offers many options. The most popular is the life income option. As per this option, if an investor deposit the money with an insurance company, the company in return a certain income for life. In case of income annuities, payouts can vary greatly so it becomes very necessary to thoroughly understand all options before investing the hard earned money. It is important because in many cases once a policy is purchased by the person, the money can get locked with the company for the rest of his life.
Out of many annuities that are based on different annuity rates, there is another type of annuity and that is single premium immediate annuity (SPIA). In this type of annuity, the investor makes a lump sum payment and the insurance company agrees to provide a specific amount of money immediately for the rest of the life of investor. It takes normally 30 days for the company to start making payment so as to complete the necessary paper work. This type of annuity ca further be divided into two parts. First one the single premium fixed annuity and in it all payment amounts are of a specific dollar amount. The second type is known as a single premium immediate variable annuity. This annuity is linked to the performance of stock index, mutual fund or a combination of both. Both types of single premium immediate annuity ensure consistent inflation-protected payouts. This makes sure that the investor gets stable standard of living during retirement.
It is always a very difficult task for a person to select the right annuity for him. In such a case, it is better to take specialist independent advice. This will prove very beneficial as they will help a person to choose the best possible annuity for him by taking into account all the important factors.
Annuity helps in tax saving. It is so because when a person buys an annuity his money becomes tax deferred until he start withdrawing his funds. Once the investor starts receiving annuity payments, only the part of investment that was gained is taxable. All annuity plans give an offer of a cancellation period. During this time period, investor can cancel the annuity without early withdrawal charges.
On the basis of annuity rates, there can be many annuities out of which one is the income annuity. The income annuity is a type of annuity that is very common with retirees who are more than 65 years old. As it is cleared from the name of this annuity, the main aim of this annuity is to provide the investor an income. This annuity offers many options. The most popular is the life income option. As per this option, if an investor deposit the money with an insurance company, the company in return a certain income for life. In case of income annuities, payouts can vary greatly so it becomes very necessary to thoroughly understand all options before investing the hard earned money. It is important because in many cases once a policy is purchased by the person, the money can get locked with the company for the rest of his life.
Out of many annuities that are based on different annuity rates, there is another type of annuity and that is single premium immediate annuity (SPIA). In this type of annuity, the investor makes a lump sum payment and the insurance company agrees to provide a specific amount of money immediately for the rest of the life of investor. It takes normally 30 days for the company to start making payment so as to complete the necessary paper work. This type of annuity ca further be divided into two parts. First one the single premium fixed annuity and in it all payment amounts are of a specific dollar amount. The second type is known as a single premium immediate variable annuity. This annuity is linked to the performance of stock index, mutual fund or a combination of both. Both types of single premium immediate annuity ensure consistent inflation-protected payouts. This makes sure that the investor gets stable standard of living during retirement.
