Annuity plans could be of great financial help during your retirement period if you select them wisely.
It takes a lot of hard work to build a retirement corpus. Nowadays, many insurance companies provide plans so that you will be financially independent for your golden period.
Hence, it is indeed vital to understand the working of the plans. Here are the types of annuity plans that you should know about.
- Life Annuity with Return of Purchase Price
Until the time you are alive, you will be receiving payments based on your annuity plan regularly at a specified interval of time. After your demise, the insurer will return the initial amount that was used while buying the annuity, to your nominee. This might be considered as a necessary choice by those who want to leave a legacy after.
- Inflation-indexed Annuity
With each passing year, there is a surge in the annuity rate, which may be 2% or even 5%. Probably, it would not be associated with the rate of inflation. However, the expenditures will be taken care of up to a certain scope or guarantee period.
- Joint-Life Annuity with Return of Purchase Price
Till the time your partner/spouse is alive, the payments will be given at a regular frequency. The initial amount will be given to the beneficiary if either the spouse or both are not alive.
- Joint Life Survivor Annuity
It will be paid until you or your partner is alive.
- Life Annuity
You will be able to receive a regular payout until you pass away. The annuity shall terminate the day you are no more alive. The payout can be received on a monthly, quarterly, or annual basis.
- Annuity Payable for a Guaranteed Phase
The annuity to be paid will be for a certain period, which could range from 5, 10, or even 15 years in case the policyholder of the annuity passes away. The annuity will halt in case the policyholder is dead or the period of guarantee is finished.
When is the Right Time to Get an Annuity Plan?
As such, there is no certain right time to buy the best plan. You can buy a plan as early as possible like at the age of 45 or 50 years and start getting the benefits regularly.
Following are the best ways to buy an annuity plan:
- Select the Right Type of the Plan
It is important to select a plan on the premise of the age of retirement and the pay-out you want. For example, you can choose between the immediate and the deferred annuity. When it comes to immediate annuities, you will receive the payments after the purchase is done. When it comes to a deferred annuity, the amount will be locked for specified times before the payments are finished. If you are about to retire, you should opt for an immediate annuity. And if you have some years before the retirement period commences, then you should opt for a deferred annuity.
- Choose the Right Type of Annuity
Most of the insurers provide different annuity options to choose from. The annuity options could range from a single-life to a joint-life annuity. Also, there are plans, which provide flexibility where the annuity payouts will increase yearly. You can assess the payouts for any specific scenario and select the best annuity plan that is suitable and fulfils your needs.
- Extensive Research the Plan Features
Before you zero in on any of the plans you need to know the requirements and do thorough research. Search for plans that provide multiple benefits for you and your partner as well and choose the payout method accordingly.
The right annuity plan will help you and your partner to live an independent life after retirement. Make sure you compare, calculate, and analyse the available plans before getting one.