Securing Futures With Money and Planned Investments
As people are valuing money more and more, they are fast becoming conscious about saving their hard-earned money for the future. A continued flow of money after retirement is becoming the need of the hour. People are investing in retirement plans and pension plans of financial institutions, while some are nevertheless investing in annuity.
edges and insurance companies that provide such plans are in need. Annuity is a commodity sold by the financial sectors to the people with the assurance of benefits and returns on the maturity of the fund.
There are various sorts of annuity, two of which are life annuity and deferred annuity.
In this kind of annuity, the annuitant gives a lump sum in exchange of which the seller of the plan gives the annuitant a set of future payments before the start of annuity. The payment made by the seller to the annuitant is based on the death of the annuitant. After the death of the annuitant the remainder of the payment will stop unless the annuitant has a nominee or beneficiary. consequently, it is a form of longevity insurance. consequently it all depends on the life span of the annuitant and the lump sum paid at the beginning. If one is smart enough, he will mention another annuitant or beneficiary in the contract or else if the annuitant dies before the amount invested is returned to him, not a single penny of the remainder will be returned to his family.
In this format of annuity the payment is held till the investor chooses to receive the payment. There are two stages in this kind of investment,
- Savings Phase and
- Income Phase.
In the savings phase the annuitant invests money in the account and in the income phase the plan is changed into an annuity and payments are withdrawn.
Earnings made in a deferred annuity are taxable only on the withdrawal of the amount. This gives the plan a tax assistance. Another assistance received in this form of annuity is a death assistance. Which method that, on the death of the annuitant, his nominee or beneficiary will receive the principal invested in addition as the earnings made in the investment.
So, an annuitant can defer annuity till he chooses to retire. Both, life annuity and deferred annuity are good ways of making money but in both situations, the annuitant should mention names of beneficiaries.