How To Select An Annuity Plan?

An annuity plan is a long-term investment plan which specifically designs to protect you from the risk of outliving your income. The person who wants to invest in an annuity plan pays either lump sum amount or regular instalments over a period of time which helps them create a corpus, which is then provided to the person as regular payments for as long as he/she lives or are provided for a predetermined period of time. The insurance provider invests your money and provides you with the income generated. 

How To Select an Annuity Plan?

Below mentioned are the parameters that can help you select the right annuity plan for yourself:

• Safe Investments

Annuity plans are long term investments plans that may range over at least for 20-30 years, these plans help you create a corpus for your future financial needs. These plans provide assured and regular payouts for life. These plans act as an income source in your post-retirement phase of life. Annuity plans help you ensure that you have a financially independent life even after your retirement. These plans ensure that the returns are seamless and hassle-free. 

• Liquidity

Although annuity plans do not allow liquidity, it is essential to always look at the partial withdrawal or withdrawals permission in case funds may be required for an emergency. Before purchasing an annuity plan you should check whether the insurance company allows partial withdrawals of funds as life is very uncertain and you should always be prepared. It is advisable to not make any withdrawals until due or in case of emergency. 

• Rate of Return

Annuity rates are the pre-decided percentage by which the annuity grows on a yearly basis. As annuity plans are long term investment plans, one should always consider an annuity plan with decent return on investment considering the inflation. Lifestyle, financial liabilities etc. 

• Choosing the Correct Type

Future financial planning comes with the need of choosing the right type of annuity plan. When you recognise your requirements, lifestyle, expenditure, financial liabilities, then you will have a fair idea of how investing in an annuity plan can be beneficial. There are several categories of annuity plans based on the time you would want to receive the payout and the choice of investment. Following are the different types of annuity plans:

• Immediate Fixed Annuity
• Immediate Variable Annuity
• Deferred Fixed Annuity 
• Deferred Variable Annuity

To Conclude 

Many life insurance companies provide annuity plans, however prior to the purchase you should carefully analyse your requirement as well as the credibility of the insurance company for a good annuity plan. Also, choose a suitable payout option for yourself. Annuity plans are created to help you financially secure your future. Before purchasing an annuity plan you can also consider your risk appetite.

Also Read:

Top Questions To Ask When Buying Retirement Insurance Plans

How to Get Your Retirement Planning on Track? 

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.