Today, annuity is one of the most popular investment products. This is a contract between an insurance company and the insured person in which you make a lump-sum payment or series of payments. In return, the company will agree to make periodic payments to a policyholder beginning immediately or some future date. These insurance plans offer tax-deferred growth of earnings and death benefits. We can divide these annuities into two types i.e. fixed and variable.
In this fixed annuity, the insurance company gives a guarantee that an individual will earn a minimum Interest rate at the time when his account is growing. The insurance company also gives a guarantee that the periodic payments will be a guaranteed amount in one’s account. These payments may be for a particular time of period such as 10 years, 20 years etc.
Whereas in the variable annuity, a person can choose to invest his purchase payments from among a range of different investment options specially mutual funds. The return rate on the purchase payments and the periodic payment’s amount one will receive eventually and it depends on the performance of the investment options which you have selected. Variable annuities are the securities that are regulated by the SEC but fixed annuities are not. At last, I suggest you to choose the best annuity options according to your requirements.
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