An annuity that pays regular income to an individual after
retirement is known as single life annuity and the insured individual is
known as the annuitant. There are certain times when single life
annuity type can really make great sense, particularly when the
individual who is buying the annuity plan is 'single' or does not want
to pass along annuity advantages to someone else.
Remember that annuity is a type of 'insurance' and usually sold by various insurance firms through agent networks. The very next thing to know about annuities is that they can be a fantastic way of a stable stream of income for the lifetime of an individual who has purchased the annuity.
How Single Life Annuity Works?
The potential annuitant first makes a lump-sum payment to the insurance firm with the anticipation that payments may either start after some time in future or may start immediately. When those 'payments' begin, the investment and interest income earned from that lump-sum are disbursed over the pre-determined time period set between the annuitant and the company. The payments carry on until the individuals holding annuity plan passes away, and at that point of time, all payments discontinue and the funds in annuity plan relapse to the insurance firm.
Payment Options with Single Life Annuity
In single life annuities, payments usually end with the death of the annuitant, as mentioned above. However, the buyers can also opt for buy 'refund' option, which means, any amount remaining in the single life annuity plan will be given to beneficiaries named in the agreement, after the insurer dies. A guaranteed term or period can also be included in the plan. An assured term makes sure that all 'payments will be made for a set time period, even if the person dies before the conclusion of the term'. In such circumstances, the payments usually are made to annuitant's beneficiary or real estate until the set period ends.
Interest rates earned with 'annuity funds' are tax deferred until the rates are withdrawn. In the United States, the annuitants should be aged 59 1/2 years or older to keep away from paying 'penalty tax' on the funds taken out from the single-life annuity scheme.
Types of Single Life Annuity Types
More often than not, an annuity plan is either an immediate or deferred annuity. A 'deferred single life annuity' has two major stages known as payout and accumulation. The funds are credited into the annuity plan and gets interests for many years throughout the accumulation stage. During payout period, annuitant receives payments that incorporate accumulated interests and principle. The amassed interest element of payouts is 'taxed' at the current tax rates of the annuitant.
Single life annuity shoppers who hold immediate annuity usually start getting payments within first year of the annuity agreement. The remaining amount carries on as the earning of 'tax deferred' interest; the income-tax on earned interest rates is unpaid when it is taken out from the annuity plan.
Hence, it is very important to warily understand the concept of single life annuity plan, and then decide to buy one from a reputed insurance company.
Remember that annuity is a type of 'insurance' and usually sold by various insurance firms through agent networks. The very next thing to know about annuities is that they can be a fantastic way of a stable stream of income for the lifetime of an individual who has purchased the annuity.
How Single Life Annuity Works?
The potential annuitant first makes a lump-sum payment to the insurance firm with the anticipation that payments may either start after some time in future or may start immediately. When those 'payments' begin, the investment and interest income earned from that lump-sum are disbursed over the pre-determined time period set between the annuitant and the company. The payments carry on until the individuals holding annuity plan passes away, and at that point of time, all payments discontinue and the funds in annuity plan relapse to the insurance firm.
Payment Options with Single Life Annuity
In single life annuities, payments usually end with the death of the annuitant, as mentioned above. However, the buyers can also opt for buy 'refund' option, which means, any amount remaining in the single life annuity plan will be given to beneficiaries named in the agreement, after the insurer dies. A guaranteed term or period can also be included in the plan. An assured term makes sure that all 'payments will be made for a set time period, even if the person dies before the conclusion of the term'. In such circumstances, the payments usually are made to annuitant's beneficiary or real estate until the set period ends.
Interest rates earned with 'annuity funds' are tax deferred until the rates are withdrawn. In the United States, the annuitants should be aged 59 1/2 years or older to keep away from paying 'penalty tax' on the funds taken out from the single-life annuity scheme.
Types of Single Life Annuity Types
More often than not, an annuity plan is either an immediate or deferred annuity. A 'deferred single life annuity' has two major stages known as payout and accumulation. The funds are credited into the annuity plan and gets interests for many years throughout the accumulation stage. During payout period, annuitant receives payments that incorporate accumulated interests and principle. The amassed interest element of payouts is 'taxed' at the current tax rates of the annuitant.
Single life annuity shoppers who hold immediate annuity usually start getting payments within first year of the annuity agreement. The remaining amount carries on as the earning of 'tax deferred' interest; the income-tax on earned interest rates is unpaid when it is taken out from the annuity plan.
Hence, it is very important to warily understand the concept of single life annuity plan, and then decide to buy one from a reputed insurance company.
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