Types Of Annuity Rate Sorted Out

By Author: Robert Cook
Total Articles: 111
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Whether you have retired involuntarily or have taken a voluntary retirement, annuities are the schemes that prove to be beneficial to you in both cases. An individual who is devoid of earning any more, he is free to purchase these schemes to guarantee a convenient living to themselves and their life partners. The amount that they receive is significant enough in fulfilling their personal desires and essential needs. The sum of amount that the individuals receive after signing a contract of annuities with the insurance companies, they are likely to get it either immediately or from a specified time period as per their own choice.

Whatever amount is decided to be paid to the annuitants is determined based on two vital factors. One is the contribution that the annuitant makes to the account and the second one is the additional amount that is credited to the account based on the interest, which is calculated at a particular rate. This rate is referred to as annuity rate. It has a very important role to play as far the amount that is receivable by the annuity seekers is concerned. Thus, before choosing an ...
... annuity deal, it is expected from the finance seekers to do a thorough research and select the best annuity rate that the market has to offer.

To get a clear-cut idea about the annuity rate that determined the sum of interest to be credited to an annuity account of the individuals. Some of the ways in which it can be done include:

Guaranteed interest rate: At the very beginning of the contract of the annuities, this rate is declared. It remains fixed throughout the annuity term.

Variable interest rate: This is the type of annuity rate to determine which; the contracts take into consideration the mutual funds of the account holders. As a result, this never remains constant and keeps on fluctuating, thereby changing the annuity amount.

Equity-linked interest rate: This is quite a beneficial type of annuity rate that is credited to the annuity account of the individuals. In this case, only the profits in the stock index are considered, thereby increasing the annuity sum, while the losses are ignored, which prevents reduction of the annuity amount.

Interest sensitive rate: This is the type of annuity rate that operates on the basis of the current interest rate of the market.

Knowing the different types of rates of annuities, however, assists the individuals in making a correct and wise decision as far as selecting a suitable annuity scheme is concerned.