Notes On Annuity Rates
The most straightforward meaning of an annuity is that it is a contract between the insured and the insurance company. Annuity is a sort of pension plan in which an individual invests lump sum amount and in lieu of this receives regular amounts on the monthly or quarterly basis especially after the retirement. The main purpose of annuity pension plan is to make the annuitant financially secured after the retirement. The payments can begin immediately after the investments or even at later date as specified in the contract.
As far as the benefits of the annuities are concerned, the main benefit that it provides is that they offer tax deffered growth of earning and even include death benefit which would provide with your family fixed amount at the regular interval even after the annuitant's death.
There are a number of rules and regulations regarding annuity rates which despite little changes here and there are same all over the globe. In other words, these are the terms that an annuitant must be kept in mind before selecting the best possible annuity for you.
You must not forget that if you are getting tax deferring on growth income, gains would be taxed on ordinary income rates and not like the capital gain rates. So before going for an annuity, you must keep this in mind that you need to pay substantial surrender charge to the insurance company if you withdraw money early from annuity.
Annuity rates can be divided into a number of types. The three main types are Fixed annuity, Variable annuity and indexed annuity.
1. Fixed annuity:-
In this sort of annuity, the insurance company agrees to pay you no less than certified rate of interests during the time your account is on the growth path. Most of the insurance companies agree that the periodic payment will be some specified amount per unit of currency.
2. Indexed Annuity:-
In this type of annuity, the insurance company credit the annuitant with a return that is based on the charges in an index. It is to be remembered that in such sort of annuity, the company agrees to pay you the contract value of a specified amount regardless of the index performance.
3.Variable Annuity:-
These annuity rates are a little bit different from others, one can choose to invest your purchase payments from a range of different investment options, more typically mutual funds. Rate of return and periodic payments that you are going to receive, will depend upon the performance of the investment.
Last but not the least, before you agree to put your signature on the paper, do not forget to clear any doubts along with the charges that can be in effect. After all, it will be too painful to discover at a later date that there are costly processing fee and charges.
As far as the benefits of the annuities are concerned, the main benefit that it provides is that they offer tax deffered growth of earning and even include death benefit which would provide with your family fixed amount at the regular interval even after the annuitant's death.
There are a number of rules and regulations regarding annuity rates which despite little changes here and there are same all over the globe. In other words, these are the terms that an annuitant must be kept in mind before selecting the best possible annuity for you.
You must not forget that if you are getting tax deferring on growth income, gains would be taxed on ordinary income rates and not like the capital gain rates. So before going for an annuity, you must keep this in mind that you need to pay substantial surrender charge to the insurance company if you withdraw money early from annuity.
Annuity rates can be divided into a number of types. The three main types are Fixed annuity, Variable annuity and indexed annuity.
1. Fixed annuity:-
In this sort of annuity, the insurance company agrees to pay you no less than certified rate of interests during the time your account is on the growth path. Most of the insurance companies agree that the periodic payment will be some specified amount per unit of currency.
2. Indexed Annuity:-
In this type of annuity, the insurance company credit the annuitant with a return that is based on the charges in an index. It is to be remembered that in such sort of annuity, the company agrees to pay you the contract value of a specified amount regardless of the index performance.
3.Variable Annuity:-
These annuity rates are a little bit different from others, one can choose to invest your purchase payments from a range of different investment options, more typically mutual funds. Rate of return and periodic payments that you are going to receive, will depend upon the performance of the investment.
Last but not the least, before you agree to put your signature on the paper, do not forget to clear any doubts along with the charges that can be in effect. After all, it will be too painful to discover at a later date that there are costly processing fee and charges.
