Annuity

What is Annuity? What does it mean for you?

So you are wonder what an annuity is? An annuity is when you have payments made to you on a regular basis with say for example a retirement plan. So you would get payments like every month.

So an annuity simply refers to a fixed payment over a period of time. This means that you will receive the payment at the same amount for the period of time specified. You can also receive your retirement payment in a single payment. The annuity simply allows you to stretch it out over a period of time.

These payments are good for being able to grantee you an income for the period of time your annuity is set up for. This is good for people who need a steady stream of income over an extended amount of time.

One of the negative things about this is that once the person who has the annuity dies the payments generally stop. The annuity in most cases can not be passed down to someone else once something happens to the person who has taken this out. This is much different than a life insurance policy in this aspect.

You may find that you will want to check into different companies when you are thinking about going this route. Also be aware that their are two different types of annuities. One is a fixed and one is a variable. With a fixed annuity the amount is guaranteed as discussed about, this is safer investment for your money. With  variable annuities, this amount will depend on how much money the investment is making. Meaning should you investment be doing poorly, then your payments will be less. On the other hand should the investment be doing well you will end up with a higher payment. Which can be good as long as the market you have invested in does not do poorly. If it does and this is your income after you retire you will want to be sure that you go with a fixed annuity should this be your only source of income. This will keep you from not having enough money to take care of your necessities.

When you are starting annuities you have the option to either use installments or paying a lump sum up front. Installments this would mean you would put money in on a regular basis The lump sum would eliminate your need for paying over a period of time.

Another thing that differs between an annuity and a life insurance policy is that there is no health check required and your health condition does not matter. This is one benefit of an annuity that greatly out weighs that of a life insurance policy. Both policies pay out but again as mentioned above the life insurance does not pay while you are living, the annuities do. Another is life insurance normally requires a health check. Thirdly the down fall to an annuities is that they normally do not continue to pay once you are deceased. Most times they can not be passed over to someone else.