The Complete Guide to Buy Your Perfect Annuity Plan

Annuities are the new buzz in the investment market and people are taking the keen interest in the same. Let’s get to know how you can choose a suitable annuity plan for you and what are the important factors you need to know about.

Anil Kumar
Created by Anil Kumar
On May 31, 2018
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The Complete Guide to Buy Your Perfect Annuity Plan

Planning their retirement is one of the biggest concerns for people, nowadays and annuity insurance plans are helping them with the same. People are putting their money in annuities to ensure a consistent flow of income during their retirement years. In this article, we are providing you a complete guide on how you can choose a suitable annuity plan for you and what are the important factors you need to know about.

Understanding the Annuity Plans

Annuity plans are designed to help people take care of their daily living expenses through the investments they made during their employment years. Under these plans, the insured pays a certain premium amount every month and the insurance provider offer a consistent income every month after they retire. The amount invested by the insured grows during those years and they receive a bigger amount than what they had invested. There are mainly two types of annuity plans: the deferred annuity and the immediate annuity. Under these plans, there are further two types: the fixed annuity plans and variable annuity plans. In the United States, there is a large pool of reputed insurance providers who are offering annuity insurance quotes at affordable premiums for their valuable buyers.

Deferred and Immediate Annuity

Deferred annuities are the traditional annuity plans in which you pay a fixed premium every month till your retirement and the insurance provider helps you with a consistent monthly income to further help you manage your essential expenses. These plans are preferred to buy while you are employed and save for your life after retirement.

Immediate annuities are made to help you with a consistent monthly income immediately after your investment. Under these plans, you can invest an accumulated amount while retiring or after your retirement and start receiving a monthly income throughout your life. These plans are a great option if you couldn’t buy an annuity during your employment for some reasons.

Things to consider

There are certain things that you are supposed to consider while buying annuities for retirement. Firstly, you are suggested to decide a coverage that you feel will be sufficient to take care of your necessary expenses after retirement. You can get suggestions from independent insurance experts to decide a sufficient coverage for you. Also, you get the opinion of a preferred insurance representative and they will assist you with the same. Moreover, you need to decide what would be a premium amount that you can easily afford to pay every month. In short, you need to look for a plan that offers a sufficient coverage at your preferred price.

The Tax Benefits

Annuity insurance is known for providing the benefits that various other financial product can’t. One of those benefits is the tax deferral provided by the state government. For example, if you have made an investment worth $15,000 in annuities, you can receive a deduction of $15,000 in your net taxable income for a specific fiscal year. This means you will have to pay less income tax than other people who have invested the same amount in some other financial institutions.

Policy Charges

Like other insurance policies, annuity plans also have their set of charges that you will need to pay in order to buy an annuity insurance. One of them is the fund management fee that you will need to pay when you opt for an annuity. Other charges include policy administration and policy allocation there paid at the time of singing a policy agreement. Different insurance providers are charging a different amount of these charges and you are suggested to check these charges before buying an insurance plan.

Withdrawal Penalties

At times, it happens that people buy an insurance plan but don’t want to continue later due to some reasons. In some cases, they realize that they have bought a wrong policy while in some cases they just find it little expensive to continue. To withdraw their investments, they need to pay a penalty better known as withdrawal charge. This withdrawal charges may be higher in initial years and go a bit lower thereafter. While you are buying a plan, you should ask about their withdrawal charges to choose the most affordable annuity insurance for you.