It is a sort if a life insurance that a person wishes to take making his/her retirement safe. Life annuity is based on a pre-determined amount that the annuitant wishes to pay periodically till the retirement day. The payments made to him until he ceases to live anymore that is till that person dies.
Life annuity is a complex topic so in before taking it a person is advised to take the help of a professional to completely understand the pros and cons. This is also a considered a method of getting the tax waved off as it has been seen among wealthy income earners or average income earners. Due to the tax-preferred nature of life annuity investors are seen taking advantages of it by transferring huge a mount of money into life annuities.
There are two phases of life annuity. The first one consists of the process of saving money in an account and the second consist of distribution of the money to the annuitants till their death. Sometimes life annuity takes the shape of life insurance in which if for instance the annuitant dies before the annuity payments get started after retirement, the beneficiary receives the annuity payments or a lump sum amount. It is like making your future safe by paying little sum of money to the insurance company and in return get paid after retirement when the monthly income ceases. The insurance companies invest the annuity payments that they get from the buyers in other investments, from where they get good returns do that they can finance the retirement of their customers.
There are many types of annuity including fixed and variable annuities, guaranteed annuities, joint annuities and impaired life annuities. No matter which type you choose it is all at your discretion. The important thing is that only that life annuity must be chosen that is best for you and your family. Since there is no guarantee of life, life annuity gives you a chance to make your future safe and it is recommended that an expert advice must be taken in order to choose the best life annuity for you.