The term “Annuity” is an investment product provided by the insurance company where people come forward to invest huge corpus or lump sum amount of money in order to gain the regular amount of interest at regular intervals. After retirement unlike other insurance policies, there is no big difference but I must say that annuity is quite complex to invest on and complicate to understand.
Types of annuities-
Similarly, Annuities in Retirement is the better platform to invest on but there 2 types of annuities where you need to think off before you invest. Now once you have deposited the corpus or amount when does the process of this period will start or how will it generate to you for that let us understand these two types.
- Immediate Annuity- This type of annuity is nothing but where you invest lump sum amount at one time and the moment your particular amount is invested you will start getting immediate returns at regular intervals. In this, you need not wait for retirement.
- Deferred Annuity- in this annuity you start investing during the phase of your working days, where you tend to create a huge corpus and once you get retired you start getting the payouts at regular intervals.
The basic difference between both is an intermediate annuity you can invest and start getting annuities returns at regular intervals you don’t have to wait for a long period this is mainly done by the people at the time of their retirement phase. and the other one is like you keep on investing which creates a huge corpus and once you are retired you start getting your regular returns this is basically for the long term and for the people who make retirement plans.
Now, how does this procedure works when you are investing how do you receive your payouts? Are there any terms and conditions we need to focus on? YES, there are two various ways to receive your payouts
- Guaranteed Payouts: which are also known as Fixed Payouts in this you earn a fixed rate of interest which is secured, guaranteed and no risk.
- Variable Payouts: in here, it depends on the assets you have invested on based on the profit or loss in your assets you will get paid the rate of interest in your payouts generally, in the variable you get 3 options to plan for investment a) Conservative b) Aggressive & c) Moderate so before investing analyse the opportunities and then step ahead.
Now I have seen many people strangling through annuities problems and even I agree at some point that annuities are complex and complicated but it depends on the contract you make and the market in which underlying assets you invest on my research on this has made a very interesting statement before investing your efforts on something make sure that it brings some value to you in future the same thing you need to apply here as well now how we do that will discuss.
Please refer to this link it will help you in clearing all your problems and doubt its easy simple and helpful to understand each and everything in detail.
If you are applying for this scheme and you are new then it is better that you consult a financial adviser plan regarding all the schemes, select the best one in which you are comfortable with discussing all the facts and figures it will be clear to you. So that in which mode you are looking forward to investing in so I suggest you before investing in annuities keep in touch with your financial adviser.
So I hope some of your doubts are cleared and helped you in getting a little bit of idea about investing in annuities it is complicated but safe and secured it also tends you to earn good amount of returns. So finally, if you have any quarries or interested in sharing your opinion or ideas regarding annuities then do comment below and if you are looking ahead to gain more ideas in earning passive income through better ways then stay tuned and updated.