April 20th, 2011 
admin Financial security is one of the most important things that an individual needs to have at every stage of his life. Annuity is a scheme which gives an individual an opportunity to protect himself against any financial trouble after retirement. This is an agreement that is signed between an insurance company and an individual. During their service tenure, the individuals save a significant percentage of their earning, which becomes their source of income when they retire. The amount that the retirees receive completely depends upon the savings that you make when you are young.
Thus, if you are still ignorant about saving money for future security, you must start taking everything seriously. Your savings today will be the earning for tomorrow. Annuity completely runs on this principle. Several payout plans exist based on which the annuitants are provided the payments. In case of these schemes, an individual can either opt to receive the income for lifetime or even choose a specific range of time till which he desires to earn through this insurance product. Without any need to take professional tension, these schemes allow individuals to earn a hefty sum, thereby ensuring safety and security to their post-retirement life.
Annuity schemes are broadly classified into two categories:
- Fixed: A retiree, when enrolls for these plans is assured of receiving fixed income throughout the period he chooses. The principal amount that an annuitant is provided with is never influenced by any kind of fluctuation in the financial market.
- Variable: If a retiree is engaged in any kind of side business, like stock exchange, etc, his principal amount might change according to the profit gained and loss incurred by him. This fluctuation classifies the scheme as variable annuities.
The fixed annuity schemes, because of their static character are considered as one of the ideal options for the retirees and hence they prefer enrolling for these plans than opting for variable ones.
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