Annuity Investments Provide Guaranteed Income

An annuity is an investment that can guarantee you a set income for life. It works in the opposite way of life insurance. When you purchase life insurance, you pay a monthly premium so that the policy will pay out once you pass away. With an annuity, you pay a lump sum and it pays out to you each month over a period of years. Most people invest in an annuity before retirement to ensure a guaranteed income after they stop leave the work force.

There are two different types of annuities-term-certain and life. They are also called registered and non registered annuities. Term life annuities pay out a set income up to age 90. If you pass away before age 90, the amount which hasn’t been paid out will go to your estate. A life annuity gives you a set income as long as you are alive. Payments will stop once you pass away and no further funds will go to the estate. There are also variations on life annuities such as options to add a spouse to the policy so that they will continue to receive the funds if you pass on.

There are various factors that can affect the amount that you are paid by an annuity. They include your age, health. gender, the amount of money you have saved, the type of annuity your purchase, the interest rates, and how long you would like to have the annuity last. The older you are the more money you will receive because you are not expected to live as long. If you have health problems you will also receive more money because you are expected you will die sooner. Women generally receive less money than men do, even if they are the same age, because women statistically live longer than men do. The type of annuity you purchase will also affect the amount of funds you receive. A basic annuity that only covers you will pay the highest amount because further options also increase the costs that the insurance company must pay. Interest rates are a big factor in the amount of money you receive- if the interest rates are high when you invest you will be paid out more. Furthermore, the more money you invest the more your payment will be.

The cost of an annuity depends on the financial institution from which you purchase it. If you have other investments with the same institution you may be able to get a better deal but generally there is a 1% charge on the amount that you purchase. Always shop around for the best rate because the costs are constantly changing. An annuity can meet a variety of different financial needs. Some people require a dependable income that they can rely on and others rely on an annuity when they retire. Whatever your needs are, an annuity will give you peace of mind that you will have a steady income for either a set period of time, or until you pass away.