By Mohammed Abdul Nadeem
Many people may not be aware of the term annuity. Well, it is related to insurance. Before selling any policy or product a company signs an annuity. It is basically a financial contract and payment that is given to the buyer according to the insurance rates. These annuities are basically the best plans for those, who want to save money for future.
There are different kinds of annuities available in the market according to the demand and needs of the people. Fixed annuities are the most common ones in the present times. Payment is generally made in fixed amounts or the payments are increased by certain percentage in regular interval by a fixed amount. Under this category various others like joint annuities, impaired annuities and many others are also available and the rates vary in each case.
What Are Annuity Rates?
It is basically the rates, which are provided by the company to the annuitant, as per the agreement signed between them. It is a regular payment, which a company makes to a person. Annuity rates are different for different policies. A person desires to get more and more benefit, but everything is planned according to the agreement. However, despite the agreement, some of these rates depend on the government policies and market conditions.
Annuity Rates for Different Annuities:
The rates are different for fixed and variable annuities. The regular payment of rates is guaranteed in a fixed type. The client will receive the payment in any case. While in variable types, payment of the rates are not at all guaranteed, but higher rates are provided to the client.
The funds that the company collects forms the fixed annuities and are generally invested by the company in very low risk government security areas and the reverse is true for the variable annuities. Equity indexed annuity is also the common annuities opted by many. It basically provides the combined benefits of the above two annuities. A person gets the opportunity to invest the money in a portfolio. Besides this, the annuity offers minimum rate of interest. These are some of the basic differences.
The different companies offer different policies and rates. A person should first search thoroughly before investing in any plan. He can talk to his financial advisor or browse the net for this task. He can also take guidance from the representatives of various companies to get an idea of what to do.
The insurance annuity value is basically a promised payment that will be given to the client in future and is presently discounted or reduced to an equivalent value today. Again the insurance annuity value varies in different annuities. The value is given to the client as per the agreement. If a person wants to get an idea about the present insurance annuity value, he or she can sum up the present value of each payment and get the answer.
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