Investing in a solid fixed annuity plan will help you secure your retirement financially. Annuities allow investors to get a steady monthly income against an initial lump sum payment. However, choosing a financial annuity plan from a top-rated financial service provider or insurance provider is critical.
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You may choose from different types of annuities, namely, fixed annuities, variable annuities, indexed annuities, immediate annuities, and deferred annuities. These plans offer protection against longevity risk. In addition, you may guarantee your monthly retirement income with the right annuity plan.
Why Invest in an Annuity Plan?
There are several reasons to invest in reliable annuity plans. However, you may first study if annuity plans are the right choice for you. Annuity plans provide financial stability and protection. However, they do not promise high returns based on market conditions.
If you are looking for investment options that offer high probabilities of profit in a short period, you may try equity-linked investment plans. This is because the “risk-free return rate” is generally higher than the inflation rate.
Annuity plans help protect your monthly retirement income against inflation, market changes, and other unexpected emergencies. In addition, since the plans offer regular payments against an initial investment, your initial investment or principal amount is also protected.
Annuity plans like “lifetime annuity plans” also work as life insurance policies. On the death of the investor, the investor’s beneficiaries are entitled to receive the pending payout. Therefore you do not have to dip into your assets for post-retirement living costs.
Experts assert your investment portfolio should ideally be the right mix of high-return investment options and low-risk investment options. Therefore annuity plans help stabilize and secure your portfolio.
Right Time to Invest in Annuity Plans
There are no hard-and-fast rules to determine the right time to invest in an annuity plan. You may start as late as 60 or as early as 40. However, the longest premium term offered for annuity plans by most financial service providers is approximately 25 years.
However, lifetime annuity plans allow monthly income payments till the death of the investor. You may also consider the payout rate and the annuity type. The sooner you join an annuity scheme, the longer you may invest.
Your insurance provider or financial service provider will compound your initial investment at around 1% every year. Therefore your retirement fund is bound to be higher if you start investing sooner. However, if you plan to start investing in annuities early on, it’s best to check if the insurance provider provides an “exit option.”
An exit option allows you to withdraw from the investment plan before the expiry period. For example, you may choose a high-payout plan if your retirement living expenses may be high. Alternatively, you may choose a “whole life annuity” if your retirement objective is a life-long pension. Experts recommend starting your annuity plan at least ten years before you plan to retire.
How to Invest in Annuity Plans
Before you invest in a plan, it’s crucial to understand the different types of annuities. You may compare annuity plans offered by a few reputed financial service providers and insurance providers. It’s recommended you work with a reliable insurance agent or financial service consultant to invest in an annuity plan.
You may also study the detailed annuity plan reviews offered by trusted review websites to make an informed choice. The process of applying for annuity plans is simple. First, the annuity plan provider may ask you to fill out an application. The application generally asks for your details, including your name, age, marital status, gender, occupation, and income level.
Specific companies may have age limitations for different types of annuities. You may consider making an extensive investment plan based on your retirement income needs, the cost of living in your city, and your investment goals.