Life Annuity: A Viable Retirement Plan

Retirement is a time when we try to materialize all our plans because we have the time it requires. But, we often lack the money. Savings, though very necessary, is not always possible owing to the various responsibilities that we have to shoulder during our career. Some of us do have the retirement pension to depend on. But they are meager if anything. Again, depending on another person, no matter how near and dear they are, financially is not a very welcome choice for many of the retirees. So, we look for plans and schemes in which we can invest so as to secure our retired life. For them investing in annuities is becoming a very good retirement plan.

Annuities are contracts between the annuitant and the financial institution. Under the contract the annuitant is required to pay a certain amount of money to the institution which along with the interest that is accrued on the amount is returned to the annuitant at the onset of the annuity. The payouts can either be in installments or in lump-sum amount. There are several kinds of annuities available.

Among them lifetime annuities are coming up as a very popular investment option among the retirees. There are two payment options. You can either pay the premium in monthly installments or at a single time. It allows the retirees to transform their life savings into a regular source of income for their retirement years. There are several kinds of life annuities. The major types of life annuity are mentioned below.

Fixed annuities: Those life annuity schemes which assure a fixed payment or a uniformly increasing payment are known as fixed annuities. The amount does not depend on any market factors.
Variable annuities: they are similar to the fixed ones except that the amount of money paid to the annuitant varies according to the performance of a group of investments. These are preferred because no tax is levied on the money invested in a variable life annuity.

Guaranteed annuities: if an annuitant dies before the amount saved is exhausted, then the remaining amount is taken by the financial institution. To avoid such a circumstance the retirees prefer to go for the guaranteed annuities. They assure that the remaining amount will go to the next of kin or anyone whose name has been mentioned as the nominee. For this the annuitant needs to pay for a certain amount of time.

Joint annuities: annuity providers usually stop the payouts after the death of one of the annuitants. To avoid this retired couples opt for joint annuities which make sure that the payments continue till the last day of the second annuitant.

Joint-Survivor annuities: This is similar to the earlier one described. The only difference is that after the death of the first annuitant the amount of money paid out is reduced. This ensures that the survivor gets lower payouts for a longer period of time till the money is exhausted.

Whenever you invest your hard-earned money, make sure that you are being offered a good deal. In order to know of the annuity provider is giving you a fair deal take the help of annuity calculators.

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