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Annuity policy, or life annuity policy, is a variation from the standard Life Insurance policies.. A policy is a process of action chosen from different choices with given state of affairs which leads to the conclusion made for present and future. Life insurance company sell annuity. It is a codified understanding between the insurance company and the person (policy holder). Annuity provides a steady income. It pays for a fixed period. It pays till death also. Annuity in general is a policy which declare the holder certain stipulated settlements against payment of instalments, as agreed. The policy has options. It can be a joint policy. It can be alonwith spouse. The premium payment to these policies close down on the death of the primary owner of the policy but the pension guarantee continues and the beneficiary of the joint holder receives until he/she is alive. Annuity has a death benefit. It can be more than the money paid. It is also equal to the money paid. Annuity is purchased by only premium payment, or through payment for a period which may last up to 20-25 years, depending on the requirements of the scheme and the policy holder's option. Annuities are not, necessarily, paid only on retirement or death but also at a pre defined time or age.Annuiyty is not only paid on death. Not in retirement also. It is paid at a particular time or age. Annuity can be {decided in two ways; the fixed annuity and the variable annuity. In a fixed type of annuity the policy guarantees a fixed amount of return.. This is because the insurers fix the rate of fixed interest to be paid during the term of the policy. Fixed annuity pays less interest. It is at par with bank's interest. But with this increase the benefit to the policy holder may not handle with the rate of price rise a decade after his policy. It provides a constant income. It pays for a fixed period. This is the benefit. However this policy is protected and secured. Variable annuities are risky because the growth of the fund depends on the stock market or mutual funds.. This is a brave choice for interested individuals, but is not preferred by many because of the risk aspect. Variable annuities provide a variety of fund investment in their portfolio.. For example, share fund, debt fund balanced fund or a cash fund. You invest in the funds. You invest in market value. These policies pay the accumulated stock value on the day's NAV. NAV is cost of the asset. This is the actual performance indicator of a fund. A fund's NAV is calculated by taking into account the total assets minus all expenses and then divided by the number of its total outstanding units. Equity schemes primarily invest in equity shares of companies. If the price rises you get more money. If the prices do not rise you get less. But these proposals risk are higher and thus the returns may vary. Debt schemes invest in income-bearing bonds, debentures, government securities, commercial paper, etc. These schemes are much less volatile than equity schemes. Balanced schemes invest both in equity market and debt market to balance the portfolio. Blanced scheme invest in debt market. It also invest in equity market}. In a cash fund the money is not invested in the equity or debt market which guarantee the policy holder the guarantee of their cash, which is free from any risk. The investment here may not grow but will never come down.. Learn more about insurance and annuity at Insurance questions and answers and find various policies on Life Annuityat askforinsurance.com.
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