How Does A Lifetime Annuity Work

How do fixed annuities work.

How does a lifetime annuity work. Lifetime versus fixed period paying until death or paying for a certain span of time and the list goes on. Through annuitization your purchase payments what you contribute are converted into periodic payments that can last for life. Payments are based on a number of factors including the annuitant. Lifetime annuities can also be called immediate lifetime annuities or payout annuities the product is designed to protect a retiree from longevity risk which is the risk of outliving your savings.

An annuity is a long term investment that is issued by an insurance company and is designed to help protect you from the risk of outliving your income. Among the best providers of those are several insurance companies that have contracted with vanguard and fidelity. Go to the vanguard or fidelity websites and do a search for fixed annuities to find out more. An intriguing form of annuity worthy of consideration is the deferred.

People who buy annuities are called annuitants and the way they select payment of the annuity is called the mode lifetime. Immediate or deferred fixed annuities are smart options for many people who are in or. How do annuities work. But some good annuity products are out there as well such as fixed annuities that adjust with inflation.

If your contract says the payout rate is 5 percent on a 100 000 annuity for example then you will receive 5 000 worth of payments every year covered by the contract. Fixed annuities work by providing periodic payments in the amounts specified in the contract.