Lifetime Annuity Ensuring Lifetime Salary

Money management is not only an important aspect of the corporate sector but also plays a vital role in our everyday life. Precise financial planning is a need to ensure smooth sailing and meet all the liabilities in life. But every financial planning is associated with some covert strategies to meet the hidden objectives. Take the case of lifetime annuity investment. You need to make a streamline of regular payment over a certain period and in return you get monthly income till your last breathe. So, it is just like sketching a matured scheme for a lifetime salary arrangement.

When you buy a lifetime annuity, you agree to the specified set of rules and regulations explicitly mentioned in the contract paper. Yes friend, an annuity is nothing but a contract between you and your insurance company and both of you are obliged to stick to the agreement policy. You invest a part of your saving. In other words, your saving gets converted into investment expenditure. Saving is important and should never be considered as the leftover of your income after spending for the consumption purpose. More you are able to save, more you get to invest in a lifetime annuity. The return from your insurance company depends on the size of your investment.

A lifetime annuity like any other annuity products undergoes two distinct phases - first one is accumulation phase and the last one is pay out phase. The first phase marks the growth of an annuity. It is important for your saving to keep on accumulating with the passage of time. Idle saving does not produce any good to the individual and that is why every banking institution or insurance company attaches an interest rate with saving. Lifetime annuity investment also grows but the growth always depends on the interest rate on offer by the insurer.

Once the individual has invested the per-determined volume of money, it is time for the insurance company to distribute income. This phase is known to be payout period. Income distribution starts in accordance with agreement between the two parties. It is also possible to pass the lifetime annuity income to your spouse. Such a facility is referred to as survivorship annuity payout. Most of the family men chose this option to secure the financial future of their spouses when the investors will be no more. But in that case, you have to accept a lower volume of monthly payment to avail survivorship benefit. This is because the insurance companies have to make more payments in this case. Tax deferment is also possible if you agree to delayed income disbursement. Tax deferred annuity helps your saving grow as the investment fund enjoys extra interest due to temporary tax exemption.

The study shows that life expectancy of a 70 year old female is more than that of a 70 year old man. When the lifetime annuity investors opt for the survivorship facility, the calculation involves more complications. The insurance company has to make rough estimation how long at least one of the investors will survive. In this case, the insurance provider can only offer lower benefits in terms of payment so that it does not incur loss. As an investor, you must take a very calculated move to make the most of your hard-earned money.

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