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Deferred Annuity - A Beneficial Scheme for Every Annuitant


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by: smith.sparrow01
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Date: Wed, 19 Jan 2011 Time: 6:20 AM

Today, those who are about to retire should always hunt for such retirement policies that might provide them hefty income for the entire lifetime. One of the best ways is to go for long term savings. Now, the best scheme that can fetch you long term savings is an annuity. So, prior to opting annuity, you must know about it in details. For insurance policies, one pays a particular amount on a regular basis as premium. When your property gets damaged owing to some mishap, its your insurer who assures you to get back the amount in the form of a coverage. Annuities are almost equivalent to an insurance policy. The only difference is that annuities lets you to pay periodically. However, you can make the payment in favor of any insurance company or might be a financial institution. Recently, deferred annuity are being considered among the finest options for retirees as it helps to boost up assets.
A Deferred annuity can be classified into CD-type deferred and Annually Renewable deferred types. Being a fixed deferred annuity, a CD-type deferred annuity sets a guarantee period where the interest rate becomes equal to the surrendered penalty period. For example, if you are opting for a eight-year CD-type deferred policy, you are ensured to get the mentioned interest rate for the full eight years provided that you commit to your contract for the full time period.
You can also opt for Annually Renewable deferred scheme. Its a conventional fixed-rate deferred annuity scheme. The insurance company resets the rate of interest every year. On receiving instant annuities, you start getting monthly payments regularly once you have deposited the amount with the insurance company. For receiving immediate annuities, you will come across quotes that are quoted entirely in a different format. There are relevant sites from where you can know everything about deferred annuity.
A Deferred annuity consist of two phases, namely Accumulation phase and a Distribution phase. For an accumulator phase, the annuitant provide consistent payments to the insurance company. All these funds are gathered and then invested so that interest can be earned. According to the terms and conditions of the agreement, the investment account of the deferred annuity finally receives the credited interest. In case of the distribution phase, the insurance company begins to dispense off the collected proceeds. In this phase, disbursements are subject to taxation as part of ordinary income. There are plenty of financial organizations that provide diverse deferred annuity schemes. You will come across a good number of private agents dealing with deferred annuity.
Fixed annuity refers to an investment contract between an annuitant and an insurance company. The insurance company after talking to the applicant agrees to pay him a fixed income for a certain time period depending upon the value invested in the annuity. Therefore, fixed annuities are also referred to as fixed income annuities. A fixed annuity can be divided into various types. Some relates to payments for a particular time period and some deals with payments depending on the life span of the applicant. The fixed annuity type solely depends on the structure required for the annuitant.

About the Author

Smith Sparrow is a business consultant who has good information on deferred annuity and fixed annuity. For more information visit http://www.immediateannuities.com/.



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