Annuity plans are essentially an agreement between the two parties, one being the insurance company and the other being the buyer. It is a series of equal payments that are made at regular intervals of time. It is a popular choice among people who want a steady income and wish to enjoy the golden period of their lives without any financial stress or burden. Post-retirement it is important to have a flow of income so that you can meet the daily needs and simultaneously maintain your lifestyle too.

Types of Annuity Plans

• Deferred Annuity: Under this, the money is invested for some period before payments are made. It can be chosen by individuals who are working and still have some years of work before retirement. It may also come with a “life cover”, which implies that in case of the demise of the insured, the nominee is paid a lump sum amount.
• Immediate Annuity: In an immediate annuity, you start receiving payments as soon as the initial investment is made. If you are approaching retirement age, then this is the type of annuity to opt for. So, deferred annuity accumulates money while immediate annuity pays money.
  You can convert deferred annuities into an immediate annuity if you want immediate payments.
  Depending on the investment type, immediate annuities are further classified as fixed and variable. When the payout made to the customer is a fixed sum for a certain number of years, it is called a fixed annuity or annuity certain. In a guaranteed period annuity, the period for, which the payment will be made, is decided. Even if the policyholder dies, payments are made to the nominee for the remaining years. If the individual survives the tenure, they receive the payout for the rest of their life.
  When the payout varies depending on the type of investment or market performance, it is a variable annuity.
• Variable Annuity: As the name suggests, within the variable annuity plans the payout is unfixed and it may accordingly vary from company to company. It happens as it completely is based on the market performance of the insurance company. Besides, the plan market-linked and is more risk-prone. It is to be noted that when the returns are good the payouts will most likely be on the higher side and vice versa.
• Fixed Annuity: Within the fixed annuity plans the amount of payout is fixed for the complete period of the annuity plan. Moreover, the plan duration is too fixed. Therefore. Even after the demise of the insured, it is the nominee who will likely receive the fixed payout.