An Annuity Contract is a type of investment or financial product in which the investor or purchaser is expected to receive a certain amount of returns or profit in a future date. Any person or company can avail of this product, most especially people nearing retirement. Like any contract, an investor is bound to pay a certain amount over a period of time and expect a payback period for the investment. Depending on the kind of Annuity Contract, a guaranteed income or a risk of variable income or loss are associated with the investment.
Kinds of Annuity Contract
A long term investment of Annuity Contract is called deferred annuity. In deferred annuity, the investor or company pays the purchase price and the repayment of income begins after the year of retirement. The investor or purchaser can either take the amount in lump sum or over a longer period. A predetermined annual yield is paid back over a period of time, this is called fixed rate of deferred annuity. The other type is variable rate, wherein the basis of pay increment is the performance of the investment.
How to go About Investing in Annuity Contract and the Benefit it will yield
Like any investment, there are benefits and risks involved. Depending on the type of annuity contract being purchased, there will be risks and benefits play. For those who love to play the investment game, the greater the risk of investment, the greater the yield or increment of investment involved as well as the risk of loss. But for those who prefer not take the risk and stick with the predetermined increment of investment, that could be a particular choice as well.
Reaching the retirement age is the best time to invest in annuity contract, since people reaching the age of 50 would have full understanding of financial processes and the money to invest. There listings of insurance companies that offer this product. Being unsure of the company to invest is common; in order to make things easy, an agent can handle the insurance need. The beneficiary must be taken into consideration as well since the future is unpredictable.
And lastly, whether the agent has full knowledge or has good arrangement for your annuity contract investment, it always pays to check and verify other companies so that a comparison can be made.