A GUARANTEED ANNUITY (PERIOD CERTAIN)
The term “certain annuity” refers to a contract that guarantees a certain amount of money over a certain number of years. With this plan, the insurance firm is obligated to pay at least this much per year. Payments to the beneficiary begin immediately following the annuitant’s death and continue for as long as the beneficiary remains alive, thanks to the annuity’s Death Benefit. This annuity effectively guarantees the beneficiary payment of any accrued benefits through the end of the specified time. Nonetheless, if the annuitant survives the term certain, the annuity will function as a Life Annuity.
USE BY THE PUBLIC
After purchasing a 5-year guaranteed annuity, Cecil passes away 3 years later. For the next two years, his beneficiary will continue to receive payments from the Annuity Company. Cecil’s beneficiary will receive 2 annual payments because insurance companies often pay the present value of the remaining instalments in a lump amount.
The annuity would have continued in the usual fashion until the annuitant’s death, if Cecil had survived the first five years of annuitization (the liquidation period).
There is a type of annuity known as a “Life Annuity Certain” that ensures a set amount of payments to the annuitant every year, regardless of whether or not they are still alive. After a certain number of payments have been made, the annuity will continue indefinitely as long as the annuitant is still alive. A beneficiary receives the remaining sum if the annuitant passes away during the guarantee period. As an illustration, a life annuity assured for 10 years is a popular contract that guarantees payments for a minimum of 10 years. In the event of the annuitant’s passing after receiving payments for only two years, the beneficiary would be entitled to the remaining eight years of payouts. If the annuitant survives the ten years, he or she will get lifetime payments, but the beneficiary will receive nothing.
PENSIONS FOR LIFE (STRAIGHT LIFE ANNUITIES)
The typical annuity looks like this. With a “Straight Life Annuity,” the annuitant is assured of receiving a set amount of money each year until his or her death. Payments under the annuity contract end when the annuitant dies. There is no assurance that the annuitant will receive payments equal to the premiums they have placed into the contract if they choose this annuity. An annuitant can get back more than the sum of their premium payments if they live a long period, but if they die soon after annuitization, the insurance company will only reimburse them for the time they were alive.
If the annuitant passes away while payments are still being made but before annuitization, the proceeds will go to the beneficiary or, if no beneficiary is designated, to the estate. This plan’s return is better than average because it caps payouts.
When it comes to returns on investment, the Straight Life Annuity is hard to beat.
BONDED INCOME FOR A GUARANTEED TIME FRAME
Periodic Income for the Rest of Your Life Guarantees that a beneficiary will continue to receive annuity payments for a set period of time after the annuitant’s death. The annuitant will get payments for the rest of his or her life.
BONUSES FOR THE REST OF YOUR LIFE WITH A REFUND ANNUITY
In the case of a Life Income with Refund Annuity, the insurance provider promises to return at least the sum of premiums paid to the beneficiary in the event of the annuitant’s death. As long as the annuitant remains alive, the corporation will keep paying the set amount of money each month.
This annuity comes in two flavours:
The Company promises to pay back the difference between the annuitant’s income and the total amount of premiums paid plus interest if the annuitant passes away.
The Company promises to keep making payments to the beneficiary until the sum of the payments made to the annuitant and the beneficiary equals the amount the owner paid for the annuity plus interest. Periodic payments will decrease the longer they are expected to continue after the annuitant’s death.
Income from annuities that include refund possibilities is often less than that from similar contracts that do not include refund options. The reimbursement provision adds value for the contract holder at the expense of the business.
BENEFIT FOR THE REST OF YOUR TEMPORARY LIFE ANNUITY
Temporary Life Annuity is a “combination” plan. The annuity will be paid out until (a) the end of a set number of years or (b) the annuitant’s death, whichever occurs first.