A bunch of annuities are all over the industry nowadays. These annuities vary from one another. It is only right and necessary to be equipped with the right knowledge before choosing one.
There are two main types of fixed annuity. These are the life annuities and term certain annuities. Life annuities refer to the annuities which pay a fixed amount each period to the annuitant until his or her death. On the other hand, term certain annuities pay a predetermined amount periodically to the annuitant until the annuity products expire.
Life annuities have several kinds. This type of annuity is also known as a whole-life annuity and or single-life annuity. There are types of life annuities which are offered all over the globe. Among these annuities are straight life annuity, substandard health annuity, joint life annuity, and joint and survivor annuity. Straight life annuity is the simplest and most inexpensive kind of life annuity. Its only insurance component is providing income until the annuitant dies. This kind of life insurance does not also pay or give money or any kind to the annuitant’s beneficiaries if there are any.
Substandard health annuity is under the straight life annuity category. This annuity may suit annuitants with serious health problems. The pricing of this depends on the chances of death the annuitant from the time he or she buys an annuity. The lower his or her life expectancy, the higher quantity of money he or she will need to pay.
Joint life annuity is another type of life annuity which refers to annuity that covers two or more individuals. The annuity will terminate after the death of the first covered. Joint and survivor annuity is somehow similar to joint annuity. It also covers two or more individuals. However, if one of the annuitant dies, let us say the annuitants are married couples, the annuity will continue to pay the living annuitant until he or she passes away too. It is up to them to come with conditions like the remaining annuitant or annuitants may request to receive payments on the event of the untimely death of his or her partner. The annuitants can also specify that the beneficiaries of the annuity will receive a smaller amount of payment after the death of one annuitant.
Term certain annuities are the opposite of life annuities. As the name implies, the annuity insure payments in a term basis. The coverage of this annuity starts from a given period of time and ends in a specified date. No matter what happens to the annuitant if he or she meets an accident or became ill with a disease or sickness, he or she will still receive a beneficial amount of amount regardless. However, if the annuitant dies before the termination of the annuity, the company will get hold of the remaining annuity value. This kind of annuity, apparently may not account to the annuitant’s health condition, accidental situations, or untimely death. One example of term certain annuity is the annuity certain. Annuity certain is an annuity in which the recurring payments for the annuitant are made to a certain period of time. It is also not dependent on the life span of the insured person.
Term certain annuities are way less expensive than the life annuities. It is because they offer lesser insurance options to the annuitants. This kind of annuity may also pose no risk to the insurer and to the company or finance provider.
Now that some types of fixed annuity are laid, it is important to stick in mind that a certain type of this annuity suits a certain type of people depending on his or her condition. Before buying or getting an annuity, one should always consider the right type of annuity suited for him or her needs.
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