Insurance Annuities

Annuities are usually used as savings for people to be used in their retirement years. You pay an insurance company a lump sum or regular amount of money for a certain period after which you will start receiving regular annuities from the insurance company. You can receive annuities monthly semi annually, quarter yearly or annually based on what you think is best for you.

Annuities can be deferred or immediate. Deferred annuities are annuities in which the annuitant starts receiving payments after a specified predetermined period of time. In immediate annuities you start receiving regular amount of money as soon as you finish making your payments to an insurance company.

There are also fixed annuities; these annuities offer you a constant rate of return on your principal amount. In this case you are assured of a secure, reliable and standard amount of money. This type of annuity works for the people who are not risk takers when it comes to their finances. You can also into enter into a variable annuity contract with an insurance company. This is usually a combination of investment and insurance companies. You get to choose on how and where your contributions will be invested. This means that your rates of return on your principal amount will depend on the performance of the investment. Funds in variable annuities are usually invested in stocks and securities and whatever returns gotten are shared between you and the insurance company. The risk takers prefer this type of annuity; however whether the performance on your invested funds is low or high your principal amount will be assured.

You can have a fixed period annuity or an annuitized annuity. In the fixed period annuity you receive your regular payments from the insurance company for a specific period lets say 15 years ,if you happen to die before the end of the 15 years then your beneficiaries will receive the remaining amount of money from the insurance company. Your regular payments can be annuitized; this means that you will receive your annuities until you die. If you die after 5 months or 1 year of receiving payments then your beneficiaries do not get anything. This type of annuity requires proper calculations from actuaries for them to determine your life expectancy. Actuaries look at things such as your current age, your health do you have chronic diseases or complications, your family medical history, your occupation, your lifestyle in general and your habits such as smoking.

For an annuity contract that best suits you get advice from your financial advisor and talk to an insurance agent explaining what your goals are concerning the annuity. Also look at the kind of life you want to live in your retirement years. You should be honest when giving out information about yourself to an insurance company so that your annuity contract does not end up being cancelled. There are some medical conditions and habits that you cannot lie about because they will show in your medical examinations and checkups.