Annuity is an investment that has insurance component backed by economic potency on an Insurance company. It is more like an investment than insurance. It is the best way to invest money with a company giving you impending results.
The basic fixed annuity plan is a common plan offered by all insurance companies. In this plan, insurance company guarantees a minimum ROI for a particular duration of time. The normal guarantee periods are up to 10 years. These are similar to bank fixed deposit schemes. There is another option, called Bonus Annuity and it is floated by some insurance companies. It offers bonus at the time of application along with consequent deposits. Taking an example, the lock-in period of 10 years is about 10%. These kind of Annuities are mainly chosen by people who have suffered some loss in other kinds of investments.
There is a variable annuity scheme in which the investment is fixed and there is variable investment alternatives designed to be chosen by policy owner. They can be in the form of bonds, mutual funds and other kinds. This annuity type is complex and you need to be knowledgeable to purchase variable annuity scheme as there is a scope of losing money with wrong decisions.
Indexed Annuity is a relatively new addition to annuity kinds. These are confusing and based on performance of market index. As long as you keep your investment in the period you’ve selected on the commencement of policy, there will be least chances to lose your principal amount and profits. This policy is not recommendable if you don’t have experience in understanding market fluctuations.
Income Annuity is popular among elderly people. The main aim for this kind of annuity is to provide regular income on monthly or quarterly basis. It is an option for getting lifetime income. The payout maybe variable and depends on the principal deposit money. You have to choose a right plan according to your future needs. Choose a solid insurance company to keep your hard earned money safe. You can get best returns by getting annuity plans from a reputed provider. It can lead you to get your income in the way you want to get it.