How to Go For the Right Annuity Plan

In order to live a stress-free life after retirement, you need to plan your finances. If you are looking for an investment option to secure your post-retirement life, then an annuity plan can be right for you. However, choosing the right annuity plan is also crucial to ensure a comfortable life in your golden period.

In this article, we will explain the factors that you need to keep in mind while selecting an annuity plan.

Not having sufficient financial corpus can be one of the biggest financial risks during post-retirement life. Therefore, it is of utmost importance to look at investment options that can provide sources of income for life after retirement. An annuity plan can help you in such a case.

What is an Annuity Plan?

An annuity plan is a type of investment option that provides the policyholder with a regular income for life after retirement. In case of an annuity plan, the policyholder needs to pay a lump sum amount or make regular payments until he/she reaches the retirement age. Once the policyholder retires, he/she will receive a regular income until he/she lives or for a pre-determined period.

Factors to Consider While Selecting an Annuity Plan

There are various types of annuity plans, and you need to select a plan based on your requirements. Here are some of the factors that you need to consider while choosing an annuity plan-

Safety

One of the most important factors that you need to consider while choosing an annuity plan is safety. Therefore, it is crucial to ensure the insurance company you select can meet its liabilities.

Policy Purchase Time

In case a person wants regular pension payments to start after retirement, he/she should consider investing in a deferred annuity plan. However, if a person wants the annuity payments to start quickly, then he/she should consider purchasing an immediate annuity plan.

Thus, while purchasing an annuity plan, it is crucial for a person to understand when he/she wants the payments to start.

Returns

One of the most important purposes of investing is to receive significant returns. However, there are some insurance companies that might not provide good returns. Therefore, while choosing an annuity plan, you need to look for insurance providers that offer better returns.

Variability

If the annuity amount is fixed, then it is called a fixed annuity. However, if the annuity amount varies due to the performance of assets, then it is known as a variable annuity.

You can select a type of annuity based on your risk appetite. If you have a high-risk appetite, then you can consider choosing a variable annuity plan. In case you are looking for fixed payments, you can purchase a fixed annuity plan.

Liquidity

In case of a medical emergency, you might need funds quickly. In such a case, you might need to get funds from your annuity plan to pay for the medical expenses. However, most annuity plans aren’t highly liquid. Therefore, you need to look for an annuity plan that provides the benefit of partial withdrawal.

Selecting the Right Annuity Plan

Keep the aforementioned points in mind while choosing an annuity plan. Also, it is wise to select an insurance provider that is reputed.