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Who Has The Best Terms On Fixed Annuity Contracts
| There are primarily two types of fixed annuities that have always given the best annuity rates. These are life annuity and term certain annuity. Life annuity pays a fixed amount that is per the agreed amount and is paid until the annuitant passes away. While in term certain annuity, once the due date is met, the annuitant has to pay the entire amount by that time. |
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Fixed Annuity Contracts -- Life Annuity
There are many different types of life annuities and it changes from one insurance company to the other. Some life annuities change their structure of payment in future if something bad happens to the annuitant like terminal illness or early demise. To make it a little clear, the longer the payments last, the smaller are the monthly payments that the annuitant has to make.
If your insurance contains more components, the payments are made for a longer duration. However, the amount of monthly payment depends on the life expectancy of the annuitant. The lower the life expectancy, the higher is the payment as there is more investment paid out for a shorter duration of time.
If you check the price of a life annuity, it consists of the money that has been invested in the annuity period along with the premium that is paid by the insurance components. Life annuities assure insurance components by allowing the annuitant to designate a beneficiary. If the annuitant dies before the term of the life annuity, the beneficiary receives the month that has not been paid. If the annuitant dies unexpectedly, the annuitant can forfeit the annuity savings to the insurance company. To cover this, there is guaranteed term in case of unexpected death.
Fixed Annuity Contracts -- Term Certain Annuity
A term certain annuity is quite different from a life annuity. It gives a particular amount of money for a particular period of time as per the date specified in the annuity contract. This payment happens regardless of what happens to the annuitant during the term of the contract. So, even if the annuitant dies before the contract is over, the insurance company gets to keep the annuity’s remaining value.
Furthermore, term certain annuities do not have insurance components. This means that these annuities do not cover the life expectancy of the annuitant and his/her beneficiary. So, if the annuitant’s medical expenses increase because of failing health, the income is not increased. Because of this, most people prefer to opt for life annuities
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