Learning The Secrets About Options

Understanding More about Annuity Annuity is a financial product, that is sold by either life insurance companies or investment companies to individuals, and which the annuity is designed to accept funds and let it grow for the individual at a specific time period through an agreed term and conditions and finalized through a contract, such that when the annuitization process ends, the life insurance or investment company starts providing an annuity payment to the individual. Annuitization is the process of converting the funds of the individual called annuitant into a series of periodic income payments, in which a specific and agreed period of time is allowed for the funds to grow, such that when annuity payments to the annuitant begins, the contract is said to be in the annuitization phase. A definite examples of annuity are the pensions and Social Security of retirees, which provide a lifetime guaranteed annuity that pays a steady cash flow until they die. Annuities, depending on the annuitant, may be annuitized, meaning the funds are being converted into investments to earn, for either a specific period of time or for the entire life of the annuitant, such that the annuity payment may only be made to the annuitant or to the annuitant’s surviving spouse in a joint life arrangement or the annuitant can arrange for beneficiaries to receive a portion of the annuity balance upon the death of the annuitant. For an individual to have a reliable means of securing a steady cash flow during his/her retirement years and to alleviate fears of a longevity risk or outliving one’s assets, an annuity package is specifically designed for that purpose. People who have won a huge amount of money in a lottery or those who received cash settlements from a lawsuit may consider to convert their money into a steady cash flow by investing their money into an annuity fund. Annuities can be structured in many ways, depending on the details and factors, in terms of the duration of time that payments from the annuity can be guaranteed to continue, such as: annuities can be structured so that payments will continue for as long as either the annuitant or his/her spouse (if survivorship benefit is elected) is alive; annuities can be structured to pay out funds for a fixed amount of time, like 20 years, regardless of how long the annuitant lives; annuities can be structured in such a way that annuity payment can begin immediately upon deposit of a lump sum; annuities can be structured as deferred benefits; and annuities can be structured as either fixed or variable.
The Essentials of Insurance – The Basics
The difference between a fixed annuity and variable annuity is that with fixed annuities, they are structured to provide regular periodic payments to the annuitant, while variable annuities allow the annuitant to receive a greater, future cash flow if the investments of the annuity fund do well and smaller payments if the investments are earning low, but the advantage of a variable annuity is that it allows the annuitant to reap the benefits of strong returns from their fund’s investments. Because variable annuities carry some market risk, an annuitant can opt to include a rider option to his/her annuity for additional features for an extra cost, such that the new annuity contract can function as a hybrid fixed-variable annuity. These riders may be also structured, depending on the need of the annuitant, such as: the annuitant can benefit from an upside portfolio potential while enjoying the protection of a guaranteed lifetime minimum withdrawal benefit if the portfolio drops in value; the annuitant may use the riders as a death benefit in the contract or accelerate the pay outs if the annuitant is diagnosed with a terminal illness; cost of living riders adjust the yearly base cash flow when there is inflation.The Essentials of Insurance – The Basics