It is necessary to live life in the moment and not worry too much about the future.
However, at the same time, it is necessary to be prudent at times and save something
for future needs. There are many financial products available today when it comes to
making a profitable investment.
One such product is annuity. Insurance companies offer to pay you small amount of
money at regular intervals for your investment made in the company. One can earn a
handsome amount of income from compnies that offer Annuities . In fact, annuities are
the best retirement solution available today.
There are various options available when it comes to earning an income from annuities.
The different kinds of annuities available right now are:
Fixed Annuity - One of the most secure methods of ensuring a steady income from
annuities is fixed annuity. A fixed annuity involves the fixture of the interest rate by the
insurance company at the time of buying the annuity. The insurance company can also
revise the rates at the start date of the annuity each year but again, the interest rate
decided remains the same throughout the year. This kind of annuity is a conservative
investment option and one that ensures a particular assured sum to the investor.
Index Annuity - Another option when it comes to making an income from annuities is an
index annuity. An index annuity is linked to an equity index whose value keeps changing
from day to day depending on the market conditions. Here, the interest rate is not
determined by the insurance company but is rather decided by the value of the equity
index the annuity is linked to.
The fixed annuities and index annuities can further be divided into immediate annuities
and deferred annuities.
Immediate Annuity - if you are looking for income from annuities, immediate annuity is
meant for you. An immediate annuity starts giving you returns immediately on
investment. You do not have to wait for a certain length of time and can withdraw your
money as and when you like. Unlike deferred annuity, an immediate annuity is also not
tax deferred and thus the returns on the investment are lower as compared to deferred
annuity.
Deferred Annuity - Deferred annuities are meant for those looking for income from
annuities in their retirement and have a considerable length of time to go for that. In a
deferred annuity, you need to invest money regularly and you cannot withdraw the
money until the lock in period is over. But the advantage with deferred annuity is that
there are no tax deductions on the investment until you start making the withdrawals.
Thus, your investment can grow manifold as compared to immediate annuity.
Annuities are a great way to ensure a steady flow of income even when the going gets
tough. They act as a shield against the uncertain economic times and the constant fear
of the markets crashing. And without tension, we can all live a happy and peaceful life
which is very important to ensure a good quality of life.
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