Facts About Life Insurance Annuities And Savings

Life insurance annuities can be confusing to many consumers but this does not have to be the case if you become well informed, so that you can make informed financial decisions. Normal life insurance pays when the insured person on the policy becomes deceased, but a life insurance annuity provides proceeds while the insured is still living. Annuities may fall into two distinct categories: those that start payments immediately and those that defer payments until some point in the future. In the first category, you make a lump sum payment to the life insurance provider and then you start receiving payments right away according to the periodic payment schedule. The second category is the most common annuity option, the deferred annuity. In this method money you pay will accumulate and gain interest over time. Once you reach the payment time line then the periodic payments to you begin. Many consumers who have these policies wait until retirement age to start the payments so that the money can be used as an income supplement during the retirement years.

Payment options with both types of annuity can be received in a variety of ways. Life annuity payments are one of the most popular choices, because this option makes payments to you for life, until you expire. A period certain annuity offers a payment schedule over a specific length of time, such as a five year, ten year, or twenty year payment plan. Another option with life insurance annuity payments is the life annuity with period certain policy. This method allows you to receive payments for life, but if you become deceased before a specific amount of time that you have chosen is finished then your survivor will receive the remainder of the guaranteed income. Joint and Survivor annuities are another option, and under these policies you will receive an income for life, and then when you pass your survivor will receive a percentage of the same income, usually fifty or seventy five percent, for the rest of their life.

One annuity payment option is deferred annuity payments. These policies have become more popular in recent years, and they come in two types, fixed and variable. A fixed annuity gives you a guarantee that the money you pay will have a minimum interest rate that accumulates, and this rate is specified in the contract. Variable annuity policies allow the policy holder to direct how their money is distributed, such as stocks, bonds, and money market accounts, and the value of the accounts will reflect the performance of these investments and may vary. That is why these annuities are termed variable annuities, and this option should only be used by consumers who have knowledge of the investments used. Annuity life insurance can offer tremendous savings on your life insurance policy plus give you the benefit of payments in the future or starting immediately. This policy type may fit your needs better than whole life insurance or term life insurance under some circumstances.