There is a lot of discussion about life annuity. Here are some simple facts.
A life annuity is a contract for a customer (annuitant) to pay a lump sum into a fund and to receive a monthly payment during his or her lifetime.
The amount of the monthly payment depends on:
* The amount paid to buy the annuity
* The future yield on the investments of the fund
* The future lifespan of the annuitant
* The expenses and profit margin of the insurance company
An annuity provides two valuable services for the annuitant. It frees the annuitant from the hassle of investing the money for many years. It allows a pooling of the longevity risks, as the annuitants who die earlier leave behind the balance of their money to pay the monthly payment to the annuitants who live longer.
Should you keep your minimum sum in the Central Provident Fund or buy a life annuity? Should you buy a life annuity with your personal savings? What type of annuity should you buy?
You can get some simple facts and tips from this article.
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