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Annuity Payments: Types and Merits
In every investment, for instance, in an insurance cover, there is a certain amount of money that you pay, maybe on a monthly basis to cater for the insurance policy. Annuity payment is therefore the kind of payment that is paid on intervals arranged by an investment plan. It is also common ion banking systems. An example of annuity in a banking system is the amount of money that you are supposed to pay in a bank account. In the case of insurance, an insurance agency expects you to pay some amount of cash which they use to cater for your emergencies if you enrolled for a health insurance policy. If you have been having a life insurance plan, they then will pay you once you retire, as pension.
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Annuity payments are of different types; right way funding annuities, deferred variable right way funding annuities, deferred fixed annuities, and immediate variable annuities. Immediate fixed annuities involves the amount of money you start paying immediately and for a long period of time. Such include retirement insurance policies where you are paid after you have retired. Another example of an immediate annuity is the health insurance policy that you are expected to pay on a monthly basis. Deferred variable annuities involve payment of some amount of money on a monthly basis for your insurance agency. The insurance agency takes this kind of money to start off an investment. The amount of money that you can pay on these annuities is not limited.
Another type of rightway funding annuity is the deferred fixed annuity. This type of annuity applies when you have entered into a contract with your insurance agency. From the money you have been paying, there is that expected amount of money you earn as a profit. This kind of contract may continue in as far as the way you have agreed with your insurance agency. Once the contract is over, you can decide to renew or annuitize it. The last type of annuity is the immediate variable annuity. In accounts that you are guaranteed long-term income, the kind of annuity you pay is the immediate variable annuity. Investing in accounts such as the 401(k) where you pay a certain amount of money when expecting some returns is an example of this. The selection of these types of annuities is based on two factors; your scheduled time for receiving your income and the rate at which you want your annuity to grow.
Some of the benefits of annuity payments include assurance of lengthy financial security and growth that is deferred on tax basis. Furthermore, due to the fact you can pay for your retirement, it assures safe exit to the retirement world where you don’t have to worry about finances.
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